Description
A no cost refinance is where the lender pays for the borrower's closing costs. This is normally achieved by giving the borrower a bit of a higher interest rate; the lender is willing to cover the borrower's fees in exchange for a higher rate of interest.
Many people start out with an adjustable rate mortgage because the payments are lower than a fixed at first. However, if they keep there ARMs long enough, they can end up paying too much on a monthly basis. After the fixed period of the ARM is over, it can adjust to as high as 9.0% in today's rate environment. You shouldn't have to accept these payment increases.
Our no cost refinance mortgage loan will lower your interest rate at no cost to you. We pay all of your closing costs such as title fees, appraisal fees, and credit report fees. There are no loan fees or prepayment penalties, and nothing is added to your loan balance.
This is a true can't-lose situation for you as a homeowner as you get the benefits of a lower rate of interest while incurring no costs to refinance. In many cases you can also tap into the valuable equity that you have accrued in your home by taking "cash-out" in the refinance.
No-Cost Refinancing Questions and Answers
Is it truly No-Cost?
Yes. You pay absolutely no points, fees, or closing costs of any kind. Other lenders may advertise "No-cost" loans but they add fees to your loan balance or the loan has an expensive prepayment penalty. None of our loans are structured in this manner. At East West Mortgage, we pay your:
- credit report
- fee recording fees
- lender attorney review fee
- title insurance
- closing attorney fees
- appraisal
- courier
- flood certification
- title search
- tax service fee
**Note: You will have to pay for the credit report and appraisal at time of application but these funds will be refunded to you at settlement. (Certain restrictions may apply depending on loan size.)
***Note: We do not pay for your prepaid, escrows, and any prepayment penalties or lender fees that you may have to pay to get out of your current mortgage.
Are there fees? Who pays them? And How are they paid?
Typical fees such as appraisal, title, escrow, and credit report fees are being incurred, but the new lender pays for everything in return for your business. The new lender also pays East West Mortgage to service and process your loan. You, however, pay nothing and will not have a single cost rolled into your new loan amount.
Is anything added to my new loan amount to cover fees?
No.
Who would benefit the most by choosing the no closing cost refinance option?
- All homeowners with a fixed term mortgage who have a rate of at least a 0.5 percent above the current market rate.
- ll homeowners with an adjustable rate mortgage whose rate has readjusted and who wish to restructure their mortgage into another ARM. Click here for our ARM to ARM refinance page.
- All homeowners with an adjustable rate mortgage who want the security of a fixed rate .
- All homeowners with a fixed term mortgage who wish to switch to a different term. Ex. 30 year fixed to a 15 year fixed.
Are there any penalties to refinance my no-cost mortgage loan in the future?
There are no prepayment penalties of any kind with our no cost refinance mortgage loans. This allows you to take advantage of any future rate declines by refinancing your mortgage at no cost again.
If I pay thousands in points and fees, would my rate be lower?
Yes. However, it would also take years to break even on this upfront investment. With no cost mortgage loans you pay nothing, so you are free to take advantage of any future drops in interest rates. If you invest what you would have paid in fees in mutual funds, you will likely make money. No cost loans make sense if your new rate is lower than your old rate… it is that simple.
What is a streamlined mortgage refinance?
Streamlined mortgage loans require less documentation so they are processed much faster. Most lenders only require 2 years W-2's, 2 pay stubs, and your last bank statement. Once you are an East West client, all of this information is kept on file so you can quickly take advantage of any future rate drops. Refinancing is hassle-free once you're with us.
- Available in all states. Some restrictions may apply depending on loan size please, call 1-800-844-1015 for details.
- The No Closing Costs interest rates will be higher than those published on the rate sheet. Please, call for rate quotes.