No fee refi

There most certainly is a fee, but they don't call it a closing cost. Mine was about $500.

Generally on those deals, they just charge you a higher rate in order to not charge you any fees. The rates change daily so when you call these places, they will likely tell you their rate went up since they advertised.

Any costs that would normally be referred to as "out of pocket" to the customer are typically just rolled into the loan amount on the "back end" by the lender.

You own a little less equity, but no cash in hand is required on the part of the borrower. Pay careful attention to make sure that's a wise investment for you.

quote:

---

As others have said the fee is built into the rate.

Instead of a 0 point loan they may have a rate where they get something like -1.5 on the price and the lender pays them a point and a half for the loan instead of charging points on the loan.

---

This exactly.

We are in the process of buying a house and have accepted an above par loan. The lender credits (negative points) will pay for all of the settlement fees. In fact, we are paying all of the sellers costs (with a corresponding reduction in sales price) to use up the credits. I calculated the ROI to be about 7 years doing it this way. We do not plan on keeping this loan that long.

quote:

---

I calculated the ROI to be about 7 years doing it this way. We do not plan on keeping this loan that long.

---

Why would you do something with a 7 year ROI when your horizon on the loan is less than 7 years? I'm just curious.

We opted not to pay a point on our new home because it was about a 5 year ROI and only saved about ~$25 per $100,000 to go down 0.25. The money was better spent in the Roth IRA for 5 years.

quote:

---

There most certainly is a fee, but they don't call it a closing cost. Mine was about $500.

---

What company did you use?

The refi I just did worked out like so.

Going from 4.5% w/PMI that was 10 months old.

Refied into 4.125%(probably could have gotten 4% oh well) with them picking up the PMI (obviously in the rate) plus there were all the fees and I paid the $400 appraisal out oof pocket.

Lender credits "paid" off the fees and about $460 on the mortgage.

My out of pocket cash to close was all to fill escrow which was about $4800 (Insurance due in a month-ish).

I thought I did well, or did I get used car salesmanned somewhere on the refi?

I have my breakeven being immediate, with an easy 15k in savings over the first 7 years or so (PMI) and close to 30k if out to 30 years was what I think I calculated last time. Basically got the loan terms I should have had started with in the first place.

quote:

---

Going from 4.5% w/PMI that was 10 months old.

Refied into 4.125%(probably could have gotten 4% oh well) with them picking up the PMI (obviously in the rate) plus there were all the fees and I paid the $400 appraisal out oof pocket.

---

I just did almost the same exact thing. We went from 4.75% and paying PMI to 4.325% with lender paid PMI. They did give us a huge credit at closing, but I noticed a line on the documents stating their $500 fee.