ArticlesBase.com - Free Articles Directory
Free Online Articles Directory
27.07.2008 Sign In Register Hello Guest
Email:
Password:
Remember Me 
forgot your password?


No Closing Cost Refinance Basics

Author: Trace Richardson Author Ranking Blue | Posted: 21-03-2008 | Comments: 0 | Views: 4 | Rating:  (53) Article Popularity - Blue (?) Got a Question? Ask.
Sign Up Now!

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!

Rate this Article: Current: 0 / 5 stars - 0 vote(s).

Article Source: http://www.articlesbase.com/finance-articles/no-closing-cost-refinance-basics-365937.html

Print this Article Print article   Email to a Friend Send to friend   Publish this Article on your Website Publish this Article   Send Author Feedback Author feedback  
About the Author:

About the Author:
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!

Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free!

Article Comments

Comment on this article Comment on this article
Your Name
Your Email:
Comment Body
Enter Validation Code: Captcha


Related Articles

No Cost Mortgage - a Real Deal or Not?
By: Dale Stouffer | 01/02/2008 | Mortgage
Mortgage companies advertise for no cost mortgages all the time. They do this to get you to call them. Do not let the adervising of a no cost mortgage confuse you to mean that your mortgage will not cost you.

Zero Cost Loans… How and Why?
By: Scott Lambertus | 24/03/2008 | Mortgage
There are many benefits to doing a Zero Cost Loan. The most obvious one is that it cost you nothing. The APR is exactly the same as the note rate. How do we do this you ask? Through a little higher interest rate, we as a company receive extra compensation from the lender directly. With this extra compensation we pay for your closing costs. It's as simple as that!

Mortgage Closing Costs: Can you Really Get a Mortgage Without Paying Them?
By: Rob Blake | 28/09/2007 | Mortgage
There is no such thing as a no closing cost mortgage. It simply doesn’t exist. There are always costs to originate a mortgage and no company or bank has the ability to waive costs.

Unnecessary Closing Costs - Mortgage Tips to Save Money
By: Aubrey Clark | 23/06/2008 | Real Estate
Unnecessary closing costs are charged to unsuspecting borrowers on almost all mortgages that close. Closing costs can be broken into three general categories, costs that the lender charges, costs that third parties charge and money that is paid on your behalf i.e. taxes and insurance. Due to the scope of...

What Is No Cost Financing?
By: Greg Lucas | 30/01/2007 | Finance
Explains what no cost financing is and how it works.

Which Loan For Me?
By: Greg Lucas | 01/02/2007 | Finance
All about the various types of loans and how to decide which would be best for your needs.

Free Financing?
By: Greg Lucas | 14/02/2007 | Finance
Is there really such thing as free financing or no cost cost financing.

Choosing The Best Mortgage : What Works for You?
By: Stephen Campbell | 24/08/2007 | Non-Fiction
When you're shopping around for the best deal in mortgages, you may feel very overwhelmed. There is no one specific mortgage that is best for every person out there, so you really have to hunt for the mortgage that fits your needs best.

Got a Question? Ask.

Ask the community a question about this article:

Q&A Powered by:
Powered by Yedda 

Latest Finance Articles

Want Money: Take An Instant No Fax Payday Loan
By: Apurva Shree | 27/07/2008
Instant no fax payday loan is also called a check advance loan. These are only short term credits and will help you if you need the money in an emergency. These are instant approval programs as the approval time is very less and the money will land in your hands within one business day.

To Go Or Not To Go For A Faxless Payday Loan
By: Apurva Shree | 27/07/2008
Faxless payday loan is something like getting your salary before it is due. Being a faxless affair, there is not much of documentation that is involved here.

Who Gets A Military Payday Loan?
By: Apurva Shree | 27/07/2008
Anybody living in the United States is familiar with payday cash loans. The number of people opting for quick cash to meet an out of the blue financial crisis is increasing.

When To Go In For National Cash Advance
By: Apurva Shree | 27/07/2008
If you are an Australian struggling with your budget near the end of the month, the national cash advance is a good option for you.

Cheap Wedding Rings: Equally Priceless
By: Apurva Shree | 27/07/2008
Just because you intend to go for cheap wedding rings doesnt mean that you have to sacrifice on quality, beauty or style.

Owner Builders: 43 Interview Questions You Need to Ask When Choosing the Right Sub-Contractors
By: Chris Esposito | 27/07/2008
Owner builders oversee the construction of their new homes, cutting out the costs of a general contractor. To do this, though, owner builders hire and manage their own sub-contractors. Choosing the right subs will make the difference between a successful owner builder construction project and a disaster. Owner builders need to ask these 43 questions when choosing their sub-contractors.

What Is The Difference Between Domestic And Offshore Mutual Funds?
By: Amy Nutt | 26/07/2008
In understanding the difference between domestic and offshore mutual funds, it is important to know what these funds are.

How To Save Money And Beat The Credit Crunch
By: Patrick Omari | 26/07/2008
As a recession looms, money becomes tight and we look for ways to make our wages stretch that little bit further. Follow this advice and you can beat the dreaded credit crunch.

More from Trace Richardson

Mortgage Website Design Basics
By: Trace Richardson | 21/03/2008 | Web Design
The mortgage industry is a competitive business. Practically every marketing medium is used to generate new customers. The problem is that each marketing channel has become saturated, and therefore less effective.

Successful Mortgage Website Design – Four Important Elements
By: Trace Richardson | 21/03/2008 | Web Design
There are many important elements to take into consideration when building a mortgage website. These elements will help determine how successful a mortgage website is at gaining organic search engine results, converting visitors to mortgage leads, and overall lead generation success.

Article Categories






Give Feedback

Sign up for our email newsletter

Receive updates, enter your email below