Unlike the girlfriends or boyfriends you made up in middle school, yes no-cost refinances are real. But what does that even mean? When someone refinances their mortgage, there are costs. People are so conditioned to think that a loan has no costs because rates have been dropping for so long, that they are surprised to even discuss costs regarding a loan. But yes, there's an appraiser who does an inspection and he usually gets paid about $450, and there's a title company that issues title insurance, and an escrow company, and that's another $1000 right there, plus underwriters and processors that work on the file, and so maybe that's another $1000. You get the idea. There are lots of people that work on your loan, and yet everybody expects the loan to be free. But how? It's simple. The way lenders absorb the cost is by structuring the loan with a slightly higher interest rate (.25% higher than wherever the base rate is at for example) and depending on the loan size, that might be enough credit offered by the bank to cover the closing fees. For example, a $300k loan with 1% credit, or $3000, would be just enough to cover the closing fees. Voila! No-cost refinance. It's magic. Like ZZ Top said, money for nothing, and chicks for free. It's a beautiful thing. And it's something I strive for on every loan. If rates go down, do it again, no-cost! Lovely right? So don't delay, contact me for one today 949.667.2887 or at www.hightouchlending.com.
- Brian Nguyen is a senior loan consultant (NMLS 659743) who learned more about this stuff than he ever intended to. The opinions expressed here are solely his own.