Are there any cons to a no cost refinance?

You cannot consider something that you don't yet have. What I mean by this is that you currently have a 7.75% rate. If you can lower that to 4% or whatever it would be for a no cost mortgage in your situation, it is irrelevant what rate you "could have" achieved. If it's costing you nothing, there is no down side. People will say that it is costing you because you are paying a higher rate. Well, the rate is not yours until you close your loan. Rates change all the time so whatever you end up with is your rate and if you do it without coming out or your pocket or raising your principal balance; you are for the better. http://WeFixRates.Com

One of the most confusing areas for consumers in a mortgage loan transaction are closing costs. Here I'll explain the advantages and disadvantages of the highly advertised "zero cost" or "low cost "loans. First and foremost, there is NO SUCH THING AS A NO COST MORTGAGE LOAN! There are plenty of costs associated with getting a mortgage loan; appraisal, credit reports, state taxes, county recording fees, title companies fees, lender fees, escrows, and more. Someone has to pay these fees, and it is always YOU. How you pay costs is the question. Homeowners need to understand that in a no lender fee or no closing cost mortgage loan, the lender simply uses "negative" points to offset your costs. For example, by having a 4.50% rate (versus the a 3.75%), you can reduce (or offset through interest rate) a large portion (if not all) of your closing costs. By choosing this option, it appear as if you saved thousands in closing costs. GREAT! But while lower costs always sounds good, you now have a significantly higher interest rate! OK, now what? No matter what anyone says, a zero cost, or no lender fee loan is NOT automatically a great deal. Although it may sound so much better than paying thousands in closing fees, you have to analyze each individual loan and client situation to determine the benefits. Many lenders speak highly of the "thousands of dollars" you save in fees. They never discuss the fact that you may spend significantly more in interest over the full life of the loan than you ever saved in up-front closing costs! Plus, lenders who constantly talk to you about zero cost loans turn you into a serial refinancer. Can a no cost loan make sense? Absolutely, but before you automatically jump into one, sit down with a local LICENSED PROFESSIONAL Loan Officer. Run the numbers both ways based on your overall picture (and especially how long you plan on living in the home) to decide if a no closing cost home loan is right for you.

You should compare both ways, and determine what the "Pay Back" period is.. for example.. if paying .25% more in rate raises your payment $25 per month, and your costs to refinance are $3000, then divide the $25 / $3000=120. This means that you will have to pay 120 months payments to break even with the costs... my advice will always be dont add to your loan amount. So having the lender pay your costs is always the best option... You start saving from your very first payment... WilliamAcres.com

As the old expression goes, there is no such thing as free. Based on the fact that you have a 7.75% 30-year fixed rate mortgage...what are you waiting for regardless if there is a cost in terms of fees or a slightly higher interest rate as others have referenced? At the end of the day, you obviously are okay making the payment that you do right now. Even if you got 5% on a fixed rate mortgage right now you would save over $300 per month. So what are you waiting for...ring in 2012 with more money in your pocket.

The rate on the no cost loan will be higher, period. Mortgage companies are in business to make money. There are hard costs of getting a loan. If you get the lowest rate possible then you will pay fees for that loan and if you do not want to pay the fees, mortgage companies will raise the rate so they can sell your loan for more money and pay the fees. The bottom line is that no-cost loans do not actually exist. You either pay the fees or pay over 30 years with a higher rate. There are pros and cons with both so you should get a good loan officer to explain all the options and choose one.

Sure refi with a no cost loan u been paying way to much for way to long paying a little extra won't make that much difference to you simply you need to refiance NOW Government fees will begin to impose on rates rember when the payroll tax got extended government will add .375% to .50% to rate on every loan.

Pretty smart. There is no such thing as a free lunch, and no such thing as a "No Cost" refinance. All refinances have costs. The question is...How am I paying for them. There are three ways. Out of pocket, added to loan balance or lender paid. When the lender pays the costs, it's because they receive a premium for an above market rate from the investor they sell the loan to. This means, as you suspected, that you will possibly be paying more interest than necessary. The best way to see how each of these options affects you is to have a mortgage professional do the math for you so you can see where the break even month is. If you think you will be in this loan longer than the breakeven month, it is usually wiser to NOT go with lender paid. My advice is to contact a local Mortgage Banker/Broker, rather than one of the big banks. Unlike a bank employee, who is most likely just an order taker, a Mortgage Broker/Banker is Trained, Tested and Licensed in all aspects of Mortgage Origination. He/She will have access to loan products of many lenders, not just those of one bank, and can properly guide you. But more importantly, He/She is trained to take a look at the various different options available to you and guide you into the one that makes the best sense for your situation. Don't forget to check out your selected Mortgage Originator at the National Mortgage Licensing System at www.NMLSConsumerAccess.org ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com

Yes, there are pros and cons with a no cost refinance. Personally, I would not instruct my clients to pay down or pay for lender fees if you can avoid it right now. Rates are extremely and it does not make since to pay the additional cost for a lower rate by .25% or .5%. Depending on your loan amount it could take a minimum of typically 3-4 years to recoup the cost. You will see a substantial reduction in your overall payment going from a 7.75 to a 4% rate already. I would rather see you pay down higher interest rate credit cards for example instead of spending it on a lower rate by .25%-5%. If you have any other questions or need a no hassle quote, visit us www.mylenderdirect.com mchandler@mylenderdirect.com.

As stated by many so far "Nothing is Free". Having the Lender would cost you between .25 to .50% in a higher rate on the entire loan balance. On a 175,000 loan with a .375 increase in rate that would cost you about 54.00 per month on the loan. With Current rates around 3.875 the cost of rolling the closing costs into your loan would be about $4.70 for every $1,000 you finance of your closing costs. For the sake of conversation 3,000 of closing costs financed would cost you $15.00 per month. This is much better than paying $54.00 per month on your entire loan balance. Normally the question of how long you will live in the home is a question, however with approx a 4% decrease in your rate, You would reduce your interest cost about $6,000. Comparing that against the costs, either higher rate or higher loan balance, I believe everyone would say just do it. One option you should consider is possibly a 15year loan because the rates are about .50% better and the new payment would likely be close to your current payment. Lastly, if you only plan on keeping your home or the mortgage for 5-7 years, you may want to consider an Adjustable Rate Mortgage. I am not normally a fan of ARM's however in your situation, it seems to be something you discuss with your loan officer. I am a Loan Officer in Ohio. Our offices are in Parma Heights. I would be glad to discuss the many options available to you. On my personal website ( www.GetAMortgageNow.com ) you will find a Break Even Calculator that you might find interesting. With the proper input it shows you the Dollar amount of your savings.

Yes, you are correct. You will typically pay for a "no cost" mortgage with a higher interest rate. What you need to do is to review two options in order to determine which one would be best for your scenario. The first option is to have the higher interest rate along with the higher monthly payment for the "no cost" mortgage and determine what your monthly payment is. Then compare that too a lower interest rate refinance loan where you roll in the closing costs into the new loan amount. Nine times out of ten I think you'll find that the rolled in closing costs is a much better option than the no closing cost higher rate scenario. I hope you find this information helpful. Please contact me with any questions or concerns. I look forward to speaking with you shortly. Adam Webb, NMLS # 196458, Mortgage Consultant, First Charleston Mortgage, 1 (800) 968-3987 or adam.webb@firstcharleston.com

Looking at both options for you is best . Comparing the lowest rate and no cost option with payments terms and savings etc for what you qualify for . This would be the simplest and best way for you to make an educated decision . Lisa Puto nmls 284925 toll free 800-413-5857

You have asked a great question. You are right that a no cost refi will result in you paying a higher rate than if you paid the closing costs. The rate increase is about .25%-.375%. This means you are financing the closing costs over the life of the loan. Long term, it will be less expensive for you to pay them and get the betterrate. If you want to finance them, you can add them to you loan amount and finance them at the lower rate. Bottom line-If you are goign to finance them and you have enough equity, addigin them to the loan amount s going to be less expensive at the lower rate, than having the lender pay them with you paying the higher rate.Joe shamieFirst Choice Bank866-970-3400 x-274jshamie@fcbmtg.com