A No Closing Cost Refinance is a Possibility by Habib

When you are cash poor a no closing cost refinance may seem like the perfect way to get yourself out of debt. An important thing to remember is that while you may be able to complete your refinance without shelling out cash, you are in fact paying for the new loan. You are simply wrapping the costs into your loan, or paying it through a higher interest rate.

Before you decide that a no closing cost refinance is just another gimmick, stop and think about the outcome of this type of loan. Although sound financial decisions take into account the long term picture, when you are close to going under financially, a quick life saving solution is what you need most. The long term can be addressed once you are out of the imminent black hole.

The first meeting with your banker and all of the information gathering that will take place at that meeting is available free of charge to any customer who enters a bank. You can get your credit history, credit scores and pre-referral for a new loan all for free. You can even do some of this on line from home. Once you have this basic information you will be able to choose the best loan option for your situation.

If you find that you have no cash available for a refinance and all of the fees and closing costs that come with the process then you will need a no closing cost refinance. Your first order of business is to keep on top of all of the fees that are being charged so that you know what exactly is being added to the current loan principal that you are refinancing. This will include bank fees, appraisal fees, home inspections and other miscellaneous fees. Do not panic about this; rather stay on top of it.

There are many people who may try to talk you out of this option. The truth is, it may be all you have available to you. "No closing costs" doesn't mean the loan is free, it just means you do not have to pay cash up for it. If you are on top of this distinction you will not get taken advantage of!

What you do not want to agree to is using your mortgage interest rate as the means of covering the closing costs. If your lender says that you will need to agree to a higher rate in order to avoid paying cash up front for your fees, consider finding another lender. This is a way that banks can make money on your loan. Any reputable bank will consider your needs and what it will take to keep you in your home. Adding closing costs to your loan principal is the best route to ask for. Be firm and stand your ground.

While it may seem nice to be getting a free loan, the truth is you are simply paying for it over the life of your loan, It will feel free, and in reality, that may be good enough!

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I made this simple loan modification checklist that can increase your chances of getting approved for a rate modification.