When looking to refinance, you can generally decide to let your lender cover the costs of your non recurring closing costs, which is traditionally known as a No Points No Fees (NPNF) Refinance. To be able to get a no closing cost refinance, you have to agree to a somewhat higher interest rate than you would get with a traditional No Points mortgage. In general, the interest rate will be somewhere between 0.25 percent and 0.50 percent higher. There are several factors included within non recurring closing costs, such as appraisal fee, credit report, lenders fees, broker fees, title insurance, escrow fees, and recording fees. Some items, such as property taxes, interest, and insurance, do not qualify as non recurring closing costs.

No closing cost refinance is fundamentally different than loans which require you to pay the cost out of your own pocket, wherein the closing costs are included within the loan amount. Believing that they are the same is a mistake people frequently make. Another misconception is that the no lender fee loan, wherein the lender either waives their fee or covers it themselves, are the same as no cost or No Point No Fee loans. In order to discover which type of loan you have, you need to look at your current outstanding balances and make sure that it is equal or close to being the same as the new amount, then make sure that you will only be paying recurring costs for taxes, interest, and insurance out of your own pocket. After that, you will need to add up al the rest of the non recurring closing costs that are estimated on your closing cost statement, and then see if your lender will be offering you a credit that is equal to the total.

In some cases, it may not make sense to go for a no closing cost refinance. This is especially true when a seller is paying a part or the entire amount of a buyer’s no recurring closing costs. In this case, the buyer needs to be certain that he or she uses all the money that the seller has put up, so that no money is left on the table. Doing this may mean that you have to pay some points and closing fees. Another important factor when thinking about no closing cost refinance is to understand that if you are a homeowner and you keep reducing your rate during every market that you own your home and keep extending the amount of your loan, you are never going to pay it off and no closing cost refinance is not really going to do you any good. At some point or another you have to realize that you are so far into the terms of your loan that you are actually paying off your principal instead of the interest. It is at this point that no closing cost refinance will not make sense. After all, you are trying to wind up paying less; finding out that you are now paying more than you originally have to simply will not help you at all.