Information

No Closing Cost Refinance Basics

By: Trace Richardson
Submitted: 2008-03-23 21:51:00
Print this article | Tell a friend | For publisher | Social Bookmarking
Rating:
 

No closing cost refinances loans are one of the best ways for you to save money when you refinance. Why pay thousands of dollars in closing costs if you don't have to? With a no cost / no points loan or a no closing cost mortgage, the broker will pay all closing costs! You keep the $2000 - $3000 you would usually pay in closing costs as they are paid by the broker. More importantly, because there are no costs paid in your refinance, we will continue to refinance your rate lower and lower as the market moves down with no costs. Every time rates go lower, you can lower your rate with no costs, even if rates only go down .25%.

The key to no cost loans is the "break even point". When you refinance with no costs your rate may be about .25% higher and this means that you will have a slightly higher payment, but this works to your advantage as shown below.

There are two components to closing costs:

1) The 3rd party closing costs (title insurance, escrow, appraisal, etc.)

2) Points you pay to buy down your rate.

If a borrower takes out a loan for $300,000 at 5.75% with $2750 in closing costs they will make a monthly payment of $1751 per month. Compare this to a borrower who takes out a $300,000 loan with NO Closing costs at 6.00% with a monthly payment of $1799. The person taking out the No Closing Cost Refinance will pay an extra $48 per month, but will have saved $2750 in closing costs. This means that unless the borrower is in the loan longer than the breakeven point of the Closing Costs - $2750 divided by the Monthly Savings - $48 which equals 57 (weeks) or 4.75 years than the No Cost Loan makes the most sense. If the borrower is going to be in the loan for longer than 4.75 years than paying closing costs and possibly points makes the most sense.

The added benefit is that if rates go down, a person in a No Cost Refinance can easily keep refinancing to a lower rate with no closing costs. There is no limit to how many times they can do this.

No cost loans are one of the most misunderstood mortgage loans that exist. Many mortgage brokers believe that they are a gimmick or scam, but the simple truth is that the math does not lie. Most homeowners are simply no in their loans long enough to justify closing costs. If you are unsure about whether a no closing cost or no cost refinance is right for you, simply have your mortgage professional run the numbers!

Trace Richardson is the CEO of TraceCapital.com, your source for No Closing Cost Refinance Loans and No Cost Mortgages. TraceCapital.com enables you to find a home loan without having to pay closing costs!

Article source: Expert Articles

Most Recent Articles in Finance category

  • Figuring Out Investment Planning - By: Patrick Johnson
    There are many things to know about investment planning - like where you should direct your money and what kind of return you should expect from your investments. And what about retirement and paying bills after you are finished working.
  • Solve all Accounting Blues with the Help of Accounting New York - By: Peter Terry
    The business professionals, who want to have expert advice working in the field of accounting can take the help of accounting New York.
  • How to Understand Your Credit Report and Credit Score - By: Teri Treadway
    Seventy-five years ago, obtaining credit could be as simple as giving your word and a handshake across the desk Today's roller-coaster real estate prices and flagging financial markets dramatically changed any "handshake" policy; and obtaining financing now, especially for a home, means an examination of your credit history, documentation of records, and a carefully scrutinized credit score.
  • Success is assured with good accounting help - By: Alvis Brazma
    Do not wait any more and immediately serve your company with a quality accounting help.
  • Boost your profits with good bookkeeping help - By: Alvis Brazma
    Nowadays the option of bookkeeping help is easily accessible and conveniently productive.
  • Debt management UK: Curb the possibility of escalating debts - By: Ashton Gabriel
    Improve on your low debt management skills with the assistance of debt management UK.
  • Unsecured Loans UK: A secured form of financial assistance - By: Gilbert Imlay
    By making regular payback installments of unsecured loans UK, one can improvise his credit score.
  • The Holy Grail of Private Banking Has Been Found - By: Aoureliou Televko
    If you're not keen on the idea of the government's prying eyes spying on your financial affairs, you're not alone. That's why private banking services are such a highly sought-after solution. The problem is, very few of them actually offer the privacy you deserve. There is one exception to that rule. Read this if you want the answer to your private banking needs...
  • No Closing Cost Refinance Basics - By: Trace Richardson
    No closing cost refinances loans are one of the best ways for you to save money when you refinance. Why pay thousands of dollars in closing costs if you don't have to? With a no cost / no points loan or a no closing cost mortgage, the broker will pay all closing costs! You keep the $2000 - $3000 you would usually pay in closing costs as they are paid by the broker.
  • Accounting Police: Do They Exist? - By: Annaya Rana
    Who created accounting principles? Who sets and revises accounting standards? What if you don't follow all the rules, do you go to jail? Is there an accounting police force that investigates and arrests violators? It would seem that there must be some regulatory force to make sure that providers of financial statements conform to the rules. There is, up to a point, and here is how it works: