| No closing cost refinances loans are one of the | | | | 1) The 3rd party closing costs (title insurance, |
| best ways for you to save money when you | | | | escrow, appraisal, etc.) |
| refinance. Why pay thousands of dollars in closing | | | | 2) Points you pay to buy down your rate. |
| costs if you don't have to? With a no cost / no | | | | If a borrower takes out a loan for $300,000 at |
| points loan or a no closing cost mortgage, the | | | | 5.75% with $2750 in closing costs they will make |
| broker will pay all closing costs! You keep the | | | | a monthly payment of $1751 per month. |
| $2000 - $3000 you would usually pay in closing | | | | Compare this to a borrower who takes out a |
| costs as they are paid by the broker. More | | | | $300,000 loan with NO Closing costs at 6.00% |
| importantly, because there are no costs paid in | | | | with a monthly payment of $1799. The person |
| your refinance, we will continue to refinance your | | | | taking out the No Closing Cost Refinance will pay |
| rate lower and lower as the market moves down | | | | an extra $48 per month, but will have saved |
| with no costs. Every time rates go lower, you | | | | $2750 in closing costs. This means that unless the |
| can lower your rate with no costs, even if rates | | | | borrower is in the loan longer than the break even |
| only go down .25%. | | | | point of the Closing Costs - $2750 divided by the |
| The key to no cost loans is the "break even | | | | Monthly Savings - $48 which equals 57 (weeks) |
| point". When you refinance with no costs your | | | | or 4.75 years than the No Cost Loan makes the |
| rate may be about .25% higher and this means | | | | most sense. If the borrower is going to be in the |
| that you will have a slightly higher payment, but | | | | loan for longer than 4.75 years than paying closing |
| this works to your advantage as shown below. | | | | costs and possibly points makes the most sense. |
| There are two components to closing costs: | | | | |