Zero closing cost finance plans are refinancing programs where you don’t need to shell out anything when closing on your new loan. No closing cost refinance may sound good but remember that it doesn’t mean that you are totally off the hook. Refinancing plans like this mean that what you need to pay upfront can be included in your principal loan or you will be given a higher interest rate for it.
As always, it is best to talk to your loan officer for the best deal
especially in this COVID-19 times where published rates can change in an instant. For zero closing cost refinancing, these may be the inclusions of the fees that will be added to your principal loan or part of the considerations for your interest rates:
– when applying for refinancing, somebody will come and visit your property to see how much the current value of your property will be. The appraisal fee can be from $300-$500.
Loan Origination fee –
this is usually 1% of your loan amount and this is the fee that you pay your lender as they prepare your loan.
Deed fee –
Deed or title fee is for the document that proves that the seller has transferred the legal ownership of the property to you. When you apply for a refinance, you need to get a new title insurance policy as this is considered as a new loan. Usually, title insurance companies give good deals for returning clients so you may want to explore this option as well.
Other fees that may be included in your no closing cost refinancing will be your credit report fee. Some of the loan providers pass off the cost of checking your credit score to you. This will set you back $25-$50 depending on your lender and your location as well. If you are refinancing a VA loan
, a small percentage of your new loan will be paid to the Department of Veteran Affairs. Expect to pay a VA funding fee of 2.15% if this is a new loan or 3.3% if this is not the first refinancing application.
The choice is usually for the lender to add all the fees in your principal or give you a higher interest rate. So before you sign the dotted line, make sure that you know what you are getting yourself into and ask your loan officer for a detailed explanation of the numbers you need to know for your zero closing cost refinancing.