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Refinance offer from my bank

My wife and I own a townhouse that we rent out that was bought way back in 2010. The loan was 30 years with a fixed rate of 5.375%. A bank offered a refinance at a fixed 2.56% with no closing costs. Should I accept the offer? Does no closing cost mean that they just roll the costs into your loan? by redingtn158 from Anderson, Alabama. Oct 27th 2021 Reply

Barb Lanis (BarbLanis)
#69 ranked lender in Illinois - 679 contributions

Well, closing costs are real and someone has to pay them - either you or your lender can pay them. A lender can bump up the interest rate enough to cover some or all of those costs via a lender credit. You will still see the costs on your Loan Estimate, but they will be offset by a lender credit. Most times, lenders will quote the market rate and simply move up your loan amount enough to cover the closing costs.

Oct 28th 2021
Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 4,636 contributions

Rare is refinancing with your current loan servicer (who you make payments to) the best option. There is also no such thing as no closing costs. All loans have closing costs, and YOU will always pay them. If you are not paying them up-front, they are hidden in the interest rate. Homeowners should always do a low cost/higher rate, versus higher cost/lower rate analysis. The math will always tell you which option is best for you... But FOR SURE, get a second opinion from a local mortgage broker too. I lend for properties in WI MN IA ND SD. Find me at Cambria Mortgage, NMLS 274132

Nov 1st 2021
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