Should you refinance with a 'no closing costs' mortgage?
So, even though a new fee is threatening to push up rates on refinance mortgages, you've still managed to find a great rate that will save you hundreds of dollars a month — and you're ready to refi.
But hold on a sec. Are you prepared for what the new loan will cost you?
Mortgage closing costs in 2020 average a hefty $5,749 including taxes, according to the data and consulting firm ClosingCorp.
Put another way, you should expect the origination fee, appraisal and inspection charges, credit report fee and all the other typical closing costs to total 2% to 6% of your loan amount. That means if you're refinancing a $200,000 loan balance, closing costs could range between $4,000 and $12,000.
What's known as a "no closing costs" mortgage or a "zero closing costs" mortgage won't make those expenses magically disappear, but it can make paying them less painful.
Don't let the name fool you. Even though it's called a "no closing costs" mortgage, you still have to pay closing costs, just not upfront in a lump sum.
Instead, you'll have two ways to dispose of the various fees.
• None By adding them to your loan amount. If your refi loan is in the amount of $200,000 and closing costs are $6,000, you'll actually borrow $206,000.
• None By accepting a higher interest rate on your loan. Your lender may cover your closing costs if you agree to pay a ...
More on: finance.yahoo.com