Do You Always Pay to Refinance?

Lower your interest rate with no cost to you through no-cost refinancing! Sounds too good to be true, doesn’t it?

Well, we hate to be the bearer of bad news, but no-cost refinancing doesn’t exist.

Think about it. There are costs associated with refinancing your mortgage. There’s the appraisal, the escrow account, the credit gathering fee, title search, and the title insurance. Someone has to pay those fees. And usually your lender isn’t nice enough to offer to cover the cost for you.

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Most of the time these offers are really referring to a refinancing loan that you don’t pay out of pocket for. Like we said, someone has to pay those fees. So a lot of times they’re simply added to your original mortgage, so you’re refinancing a larger loan than you technically had to start with.

The other option is to let the lender cover the closing costs, but agree to pay a higher interest rate. You didn’t pay anything upfront, but you’ll pay more in interest over time.

Don’t forget to shop around and negotiate

When it comes to your mortgage, you shouldn’t be shy about finding the best deal. Start by shopping around for the right lender. Then negotiate everything you can. You might be able to negotiate a slightly lower interest rate or lower some of the lender fees. Sure, it’s not a no-cost refinance, but it is a lower-cost refinance.