No Cost Refinance Fantasy

The idea perpetuated by the no cost refinance advertisers primarily that no cost refinances even exist, is just mean. This no cost refinance fantasy will be put to rest here and now.

I estimate half of the people I have discussed mortgage refinancing with over the last year have wanted to know more about the no cost refinance loans they saw on TV or heard on the radio.

So let me clear this up once and for all…There are only 3 ways mortgage closing costs get paid on a refinance:

1. Borrower Pays by bringing a check to the closing. (not very popular)

2. Borrower Pays by using yield spread premium to pay them (taking a higher rate creates money to pay costs-the typical no cost refinance method uses this means to the end.).

3. Borrower Pays by rolling them into your loan. In other words, financing the costs into the new loan. For example, if the current mortgage payoff is $200,000 and your closing costs are $5,000, your new loan amount when you refinance is $205,000.

Now remember, there are always costs for a refinance. It is a new loan….no one can do a refinance for free. Do NOT be fooled by the BS out there that companies actually do a no cost refinance.

Translation: They lock you at a rate that is high enough to create enough money to pay the costs of the refinance and then line their pockets with who knows how much. They pay your costs with a small portion of the money created with YSP then take the rest for themselves.

Also, don’t be one of those people who will step over a nickel to pick up a penny. We have been trained in this country to think costs are bad.

Guess who made sure that was drilled into your brain.

The banks…

Guess who has costs?

Brokers have costs. The bankers main competition. So once the banks re-direct your attention to costs, making costs not just bad, but evil. Then, by proxy they can paint all mortgage brokers as evil too.

That’s the ticket…If all mortgage brokers are evil then it must stand to reason you are better off at a bank.

Don’t fall for this whopper of lie…find yourself an ethical broker and you’ll do much better than a bank.

To make sure you’re working with an ethical, local, professional mortgage broker who’ll always get the best deal…see The Mortgage Advantage Mortgage Shopping system.

Remember, closing costs are in every refinance. There is no getting around it. Anyone attempting to get your business claiming the opposite is playing word games and by definition, a liar.

Banks are the typical sellers of these no cost refinance offers, it’s no surprise the banks are lying…

I’d only really be surprised…if they weren’t…

Good Luck!

Author: Rob K. Blake
Published December 12, 2007