Refinancing a home or business mortgage is something that most people consider from time to time.  The idea may seem more appealing when you see television commercials, mail flyers, and advertisements online for no cost or cheap refinancing.  The cost of refinancing is what keeps many people from going through with it, so a no cost refinance program sounds more than ideal to most!  But, do these programs really exist and are they right for you?  Refinancing can be a difficult decision, but many low cost or cheap refinancing programs make it much easier.

Do No Refinancing Cost Programs Exist?

It’s a fact that these programs do exist.  Many companies offer them to homeowners because they realize that there are people out there that are interested in refinancing but cannot afford to pay the closing costs associated with them.  Cheap refinancing or no cost programs are ideal for many because it will allow them to lower their mortgage payment and not have to pay the large sums up front that are associated with your traditional refinance.  There are a variety of cheap refinancing programs out there to choose from, so it’s always a good idea to shop around a bit before you decide on which company or program is for you.  If you are told by one that these cheap refinancing or no refinancing cost programs do not exist, move on, because they do!  The important decision is not only which company you choose, but determining if this sort of low cost refinancing program is truly for you and your specific homeowner situation.


How It Can Be No Cost or Cheap Refinancing?

You may be wondering what the catch is, because nothing is free or no cost these days.  There isn’t really a catch, just a difference in the way the numbers are crunched.  When you take advantage of one of these cost low refinancing programs you should expect the interest rate to be a bit higher than it would be if you refinanced in a traditional sense.  It’s a good idea to know what the current home mortgage refinance rate is so you can compare. 

So, while the loan may be considered cheap refinancing, you are actually paying the closing costs, you are just paying them through interest instead of up front.  This may turn you off of such deals, but don’t look away too quickly.  If your current mortgage payment is higher than the rate on a no cost mortgage rate, than you may want to consider one of the cheap refinancing programs out there.  Are they one size fits all and is a cost low refinancing program for you?  This is where things get a bit tricky.


Is a Cheap Refinancing Program For You?

Even if your no cost low refinancing mortgage payment would be less than your current payment, you may not want to refinance right now, or with one of these payments.  Remember, your interest rate will be significantly more with one of these programs than if you were to pay the closing fees up front.  Whether you should opt for one of these cost no refinancing loans should all depend on your time table, to be more specific, how long you plan to live in your home.  If you believe that you will sell your home within the next two to three years, the cheap refinancing or no cost deal may be a great idea.  If you plan to be in your home for longer than that, you would probably want to avoid this sort of refinancing deal.  If you plan to be in your home for a longer period of time and you are in need of cash, you still may be able to go for a traditional refinancing instead of a cheap refinancing program because you can usually include the costs of refinancing in your new loan.  Make sure to review all of your options if you plan on staying in your home longer than two to three years, because there are usually benefits in refinancing traditionally instead with a home mortgage no refinancing cost loan.


Shopping for Your No Cost or Cheap Refinancing Loan

When you are shopping for a cheap refinancing or no cost loan you should be sure that you and the lender see eye to eye on the details.  You should be sure that you are not dealing with a zero points, zero fees, or no cash loan because these are very different than a no cost loan.  It’s important to remember on a true no cost loan the lender will collect no fee and will pay all of the settlement costs on your behalf without increasing the amount of the loan.  If this is not the case, you are not dealing with a true no cost loan and you may want to re-evaluate your options.


What You Will Pay

Even with a true no cost cheap refinancing plan you will have some expenses.  You will pay per diem interest, which is the interest that accrues from the day of your closing to the first day of the following month.  You will also pay interest from the first day of the month to the closing day.  You should also expect to pay escrows on a cost low refinancing loan.  You should also expect to pay homeowners insurance as well as any transfer taxes.






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