Mortgage Refinance

1 Reply

Hello, I am thinking in refinance my mortgage. The other day I got a advertisement in the mail of a company willing to refinance my mortgage for a lower interest rate, no closing fees, NO FEES AT ALL. Is that even possible? I don't have the name of the company right now. I looked up on the internet the other day and it had good and bad reviews, I have not call them yet. I also have a PMI on my mortgage and I was wondering if I refinance, I could get rid of the PMI. I have this mortgage for 2 years already. If I refinance with this new interest rate and without the PMI I will be saving about $200 in my mortgage per month, but I will be starting from 0 and the 2 years I have already paid won't count. Please advise.

Hey @Yusleidy Espino Matos

No cost mortgages are most certainly a thing.  The lender is probably passing a long a slightly higher interest rate for this luxury.  The way it works is that the lenders give what are called "rebates."  These are the opposite of points.  It is the lender's way of paying you back for taking a higher interest rate.  For example, if closing costs are $3,000 they look for the rate that is paying a $3,000 rebate and then pass that rate along to you.  Rebates are often expressed as a percent of the loan.

If you plan on keeping the mortgage for all 30 years, it is generally wise to pay the fees instead because you will recoup them over the life of the loan.  However, if you are going to refinance it out before the 30 years (which most do), it is often wise to take the no cost option.

Hope this helps!

David