How to compare refinance mortgage no closing costs to other refinance options?


A refinance mortgage with no closing costs is a great option for a regular homebuyer who is given to refinancing every now and then when the market rates make sense.

With a no cost refinance mortgage closing costs will be zeroed, but the borrower takes somewhat higher rate - up to 0.5%.

Choosing a refinance mortgage with no closing costs vs a regular refinance should be made on reasoning what type of a borrower you are.

Who would choose refinance mortgage with no closing costs over paying points and closing costs?

If you are the type of person who wants their mortgage, once and for all, set up for the next 30 years without having to even think of it, then the no cost refinance is a loser. In the long run you are losing thousands compared to a normal mortgage with prepaid points and closing costs paid upfront. The no closing costs refinance mortgage is one where the borrower accepts a higher rate. The break-even usually occurs between 3 and 5 years. That means, if you refinance again, or sell, within the break-even period, the no cost mortgage refinance is a winner.

Many investors and borrowers who are comfortable with their finance management would rather take a no cost purchase or refinance mortgage with the purpose of refinancing to a lower no cost rate as soon market rates drop. Of course, a double-digit inflation could wipe out any difference between a no cost and a normal refinance mortgage, but in any other case a no cost mortgage is simply an investment tool used by consumers to maximize their cash flow.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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