No-Cost Refinance is one with an interest rate high enough that the lender's discount or rebate covers the closing costs. Rebates or discount points are negative points. Lenders charge points on low-interest rate loans and pay them on high-rate loans. For example, on a 30-year fixed-rate mortgage, they might quote 6.75% with 2 points, 7.25% with zero points, and 8% with a 1.5-point rebate. If the 1.5 point rebate covered the settlement costs, 8% could be the no-cost rate. In such cases, the borrower taking a no-cost refinance is paying the settlement costs in the rate. If he pays off the mortgage in a few years, it's a good deal. If he has it a long time, it is a costly deal. In sum, No cost refinancing usually means that the lender agrees to pay all normal closing costs when refinancing a mortgage. Some of these costs include the loan origination fee, appraisal fee, credit report fee, attorney's fees and title fees. One reason to consider no cost refinancing might be because of job loss or a job change resulting in lower income. Current monthly payments may be too high to maintain and as a result payments are late and charges are mounting up. Late payments are resulting in a lower credit score and credit history is being damaged. Damaged credit history will mean paying higher interest and fees for future purchases. To avoid damage to credit consider refinancing with a lower interest rate. This should also result in a lower monthly payment and shorter payoff terms.

Reasons to choose a No Cost Loan or No Cost Refinance:

* You are not sure how much longer you will stay in the house or you may be relocated within 3 -5 years.

* Your loan balance is > $200,000

* You are not sure how much longer you will stay in this new mortgage. In some states, the average loan pays off in less than 4 years. It typically takes 4 to 6 years to recapture closing costs if you decide to pay them when refinancing your home. Remember that you don't just refinance to get a lower rate. It could be for a medical emergency, college education for your children, to remodel the house etc.

* You believe that there is a chance that rates might go lower in the future. If they do, we can refinance you once again with no costs.