The name no cost mortgage refinance, implies that there are no costs acquired by refinancing your home. But, is this process really free? Very few things are really free in life and a no cost mortgage is included among those things. Although the name makes it sound good, there are costs involved.
Lenders just simply are not going to pay the costs for you. They’re in the business of making money and when fees are incurred, they will re-coop them in some way. Sometimes you might not have to pay the lender anything, but you will be responsible for third party fees.
However, in most instances, all the fees and costs that are involved will just be added on to your new interest rate. Lenders will increase the interest on the new loan enough to cover all of the expenses associated with a no cost refinance and you may not even realize that you’re literally paying them yourself.
If you really need to refinance your mortgage, you will be much better off saving up all the needed fees and paying them upfront. Having all the costs bundled in with the interest will cost you much more in the long run than the original amount of the fees.
