No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.
When looking to refinance, a borrower has multiple rate and cost options. Borrowers can choose to pay upfront discount points to get a lower interest rate, resulting in high closing costs, go with a 0-point loan that has a slightly higher rate with no or limited lender fees. The consumer primarily pays third-party costs such as appraisal, title insurance, county recording, etc., or finally, get a no-cost loan.
A no-cost refinance is a refinance in which the lender provides credit in exchange for a slightly higher rate to cover all lender and third-party closing costs, including appraisal fees, title fees, county record fees, etc. The lender provides the credit in exchange for the borrower financing at a higher interest than they could get if they paid the costs themselves.
How much your interest rate will increase depends on a variety of factors. Generally, the rate increase will be the minimal on a primary residence combined with a borrower with great credit. Additionally, higher loan balances limit the rate increase, given that the lender’s credit is paid based on a percentage of the borrowed loan amount. Fixed-rate mortgages are also more likely to have a good no-cost option, as adjustable-rate mortgages usually don’t pay out significant lender credits.
The exact closing costs vary, as always, and these are affected by the purchase price of your home. Closing costs typically include the following:
Many lenders charge loan origination fees, even for a refinance, but Sammamish Mortgage doesn’t charge these fees.
A true no-cost mortgage eliminates lender fees and includes a lender credit to cover all third-party closing costs. Many banks claim to offer ” no-fee” loans; however, third-party costs often still have to be paid by the borrower. Other times, mortgage companies simply add the closing costs to the loan balance.
At Sammamish Mortgage, you can choose from various rate and cost options, including rates with a lender credit sufficient to cover all lender and third-party fees. Through our Instant Rate Quote tool, our clients can easily compare options side by side and determine which option makes the most sense for their situation.
If you are unsure which refinance option is right for you, we have experienced loan officers who can guide you through the pros and cons of each scenario and help you pick the one likely to provide you with the highest overall savings. Find out if it makes sense to refinance with our Refinance Calculator.
We’re a local, family-owned mortgage firm based in Bellevue, WA. We serve the broader Pacific Northwest region, including Washington, Oregon, Colorado, Idaho, and California. Please contact us today with any financing-related questions you have, or visit our website to get an instant rate quote.
What is a no-cost refinance?
A no-cost refinance allows the lender to offset closing costs by offering a credit in return for a modestly higher interest rate, eliminating upfront fees from both the lender and third-party providers.
How does a no-cost refinance work?
The lender covers your closing costs, which may be added to your new loan balance or offset by slightly higher interest rates, so you don’t pay out of pocket at closing.
What are the benefits of a no-cost refinance?
Benefits include saving money upfront, reducing out-of-pocket expenses, and making refinancing more accessible for those with limited cash.
Will I pay more in the long run with a no-cost refinance?
Possibly. If costs are rolled into the loan or interest rates are higher, you may pay more over the life of the loan.
When is a no-cost refinance a good option?
It’s good when you want to avoid large upfront costs, especially if you plan to sell or refinance again soon.
Can I choose a no-cost refinance over a traditional refinance?
Yes, if you want to minimize upfront costs and are comfortable with potentially higher long-term costs.
What is the difference between a no-cost refinance and a standard refinance?
A standard refinance usually involves paying closing costs upfront, while a no-cost refinance waives those costs but may include higher rates.
Will a no-cost refinance affect my credit score?
The credit inquiry and new loan may temporarily impact your credit score, but overall, it’s similar to other refinancing options.
Is a no-cost refinance suitable for everyone?
Not necessarily. It’s ideal if you want to avoid upfront costs, but if you plan to keep the loan long-term, a traditional refinance with lower rates might be better.
How do I know if a no-cost refinance is right for me?
Evaluate your financial situation, how long you plan to stay in the home, and compare total costs over the loan term.
What should I do before choosing a no-cost refinance?
Review all loan terms, compare options, understand how costs are covered, and consider your long-term plans for the home.
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.