Is there really such thing as no cost refinance??

[AlexTina]

I mean truly no cost. I'm not talking about rolling closing costs into the mortgage. I keep reading about people refinancing now since the rates are so low, they claim that they've received a no cost refinance but every bank website I've checked has the normal closing costs. How do you go about finding a real no cost refinance? Do they even really exist?

Tina

 

[blt2010]

I am also interested in this too. So far, I found none.

 

[mrsklamc]

We did one. Try calling a credit union instead of a bank. Everything was 100% free except:
1) the interest rate is a point higher than most because we didn't pay any points up front.
2) if we move in the first two years we have to pay for the appraisal so the credit union isn't out the money ($250)

 

[BLLB]

Our mortgage is with Wells Fargo. They offered a no-cost refinance to us. It would have dropped our interest about 1%, the problem was is that the shortest term they offer is 15 years and we have less than that on our mortgage, plus we pay extra each month.

But, to answer your question, it was not cost to us.

 

[bellarella]

Our mortgage is with Wells Fargo. They offered a no-cost refinance to us. It would have dropped our interest about 1%, the problem was is that the shortest term they offer is 15 years and we have less than that on our mortgage, plus we pay extra each month.

But, to answer your question, it was not cost to us.

Was there a pre-payment penalty with the new mortgage? If not, why didn't you take the 1% drop in interest rate and accelerate your payment even more?

 

[jessrose18]

We just finished our refinance with usbank "no cost". Which meant instead of taking 4.3% for 30 years we took 4.9% and they covered 4,000 of the closing costs instead of adding to our loan. We did have to have a new appraisal which they rolled into the loan as well. Added to our loan payoff was interest charges from our last payment to closing date (900), had to repay title insurance (1,000) and start a new escrow accoutn (1200). We took 1,500 in cash out ..so our 148,000 loan turned into a 152,000 loan for 30 years 4.9% interest and saved us $130 a month in p/i and $40 a month in pmi (still carry pmi, but ratio is now lower). Got to skip 2 house payments (close at the begining of month and loan will be payed off before penalty period. SO all in all it was worth it for us. But, it was not as simple as they tried to sell it to us the first day "no cost, so easy, no appraisal, " three months later and every detail changed at some point.

 

[minnie1928]

Was there a pre-payment penalty with the new mortgage? If not, why didn't you take the 1% drop in interest rate and accelerate your payment even more?

I'm doing the Wells Fargo no cost refinance right now. There is no prepayment penalty and I'm doing exactly what you state above. I'm keeping my payment the same as it currently is and shaving years off my mortgage.

 

[Arkansan]

We also just completed the no-cost refi through Wells Fargo. Absolutely no cost to us! We even got the documents notarized for free at our bank and they sent pre-paid UPS envelopes to return them. We dropped our rate by 1%. We thought about a 15 yr. mtg, but it would have raised our payment. Since there is no penalty for pre-payment, we plan to pay extra on our 30 yr. mtg. I guess the "catch" is that you have to have stellar credit to even qualify, but they contacted us. (previous mtg. was also with Wells Fargo)

 

[minnie1928]

Got to skip 2 house payments (close at the begining of month and loan will be payed off before penalty period.

My refi closes on 10/29 and my first payment is due on 12/1. I ran the numbers and found that if I make my first payment on 11/1 and start the payment clock early that it will shave 3+ months off the length of my loan.

 

[minnie1928]

I guess the "catch" is that you have to have stellar credit to even qualify, but they contacted us. (previous mtg. was also with Wells Fargo)

Same with me...they contacted me as well. I think they are just looking to keep their low risk clients rather than seeing them refinance elsewhere.

 

[AlexTina]

The catch with wells Fargo no cost refi is that you have to be have your current mortgage with them, unfortunately I don't. I am currently with metlife and am at 5.5% if its possible to get in on the 3.8 - 4% thats floating around right now with little to no cost I would love to do it. Penfed had 0 points and 3.75% posted today but when I entered all the info they gave me an estimated closing cost of close to 10k which I thought was completely insane. So I'll keep looking and if anyone else has any success please post, seems so far the only completely free refi is with wells Fargo for existing loans.

Tina

 

[TiggerMomNine]

Unless you are doing a modification (with your current lender), there are always costs for a refinance.

For a refinance, there are costs to get the appraisal, credit report, title costs, settlement costs, your new impound account, etc. What is called a "No cost refi" means that you are rolling your costs into the new loan, either by increasing the amount you owe, or by getting a higher rate. The higher rate option allows the lender to pay your closing costs for you by using what's called "premium pricing".

Remember when you are refinancing to consider the term. If you have a 30 year loan, and it's 2 years old, and you refinance it to another 30 year loan at a lower interest rate, you are resetting your term back to 30 years again. Don't forget to consider that when you are determining whether it is really a benefit.

I've been in mortgages for almost 20 years - if you have any other questions.

 

[MommytoaSweetie]

We recently refi'd as well (also with Wells Fargo). I'd never heard the term "no cost refinance," but I guess that's essentially what we got - a great new low rate, saving over $300 a month in mortgage, and we paid less than $1000 for whatever closing costs the bank hadn't covered (which was our next month's mortgage, and less than our current or former payment amount). It's a great deal for us! Our Wells Fargo agent did contact us (we had also called him a few months prior to check things out - not sure if that helped), so maybe contact whoever has your mortgage now? We are very blessed by the savings!

 

[allison443]

The catch with wells Fargo no cost refi is that you have to be have your current mortgage with them, unfortunately I don't. I am currently with metlife and am at 5.5% if its possible to get in on the 3.8 - 4% thats floating around right now with little to no cost I would love to do it. Penfed had 0 points and 3.75% posted today but when I entered all the info they gave me an estimated closing cost of close to 10k which I thought was completely insane. So I'll keep looking and if anyone else has any success please post, seems so far the only completely free refi is with wells Fargo for existing loans.

Tina

Why do you have to have a no cost refi? I agree $10K is too much, that seems off, but maybe you could find a low cost offer. I haven't seen any true "no cost" refi offers. We refinanced in the summer, our total costs were $499. It was definitely worth it to pay that though because of what we are saving each month.
Have you found any low cost refi offers where you would recoup the cost in a couple of months worth of lower payments?

 

[princess81499]

We also just completed the no-cost refi through Wells Fargo. Absolutely no cost to us! We even got the documents notarized for free at our bank and they sent pre-paid UPS envelopes to return them. We dropped our rate by 1%. We thought about a 15 yr. mtg, but it would have raised our payment. Since there is no penalty for pre-payment, we plan to pay extra on our 30 yr. mtg. I guess the "catch" is that you have to have stellar credit to even qualify, but they contacted us. (previous mtg. was also with Wells Fargo)

Exactly the same situation as us. It was a very easy process!

 

[DawnM]

What rate are you getting with Wells Fargo with the no cost loan? And for 30 year? 15 year?

Don't you need to have a Wells Fargo loan first and refinance the same loan? I thought I read that you needed to already have a loan through them to do it.

We actually cannot use Wells as they are one of DH's company's clients and he isn't able to use any of their clients due to conflict of interest.

But I am curious on what rates these no cost loans are.

We currently have 4.37% on a 15 year. We did pay a broker fee and appraisal, but the bottom line savings were worth it.

This was last December. We have been looking at Amerisave's 3.25%. We would pay a fee of about $3,500 to them, but the bottom line savings would be over $20,000.

Dawn

 

[minnie1928]

What rate are you getting with Wells Fargo with the no cost loan? And for 30 year? 15 year?

Don't you need to have a Wells Fargo loan first and refinance the same loan? I thought I read that you needed to already have a loan through them to do it.

We got 4.75 on a Jumbo, Conforming 30 year mortgage (they've never gone lower according to my agent). We live in Northern NJ where the housing prices are just insane and we just moved here 2 years ago (before prices REALLY began to fall). We did have a WF loan originally and they did not modify the loan, they are actually writing a brand new loan. But, even though it's a 30 year loan they give you the option right in your mortgage package to increase your monthly payment in your automatic monthly payment. So, while we had 28.5 years left on the original mortgage I can take the difference between what we were paying vs. what our new payment is and apply it to principal every month. So, in effect, our payment stays the same but we're done in 25 years with no cost to us.

 

[DizzyFORDisney]

Our mortgage is with Wells Fargo. They offered a no-cost refinance to us. It would have dropped our interest about 1%, the problem was is that the shortest term they offer is 15 years and we have less than that on our mortgage, plus we pay extra each month.

But, to answer your question, it was not cost to us.

Same here. Called WF on Thursday and did a no-cost refi over the phone. Just have to sign and notarize docs. Took the 15 year but we only had 8 left. We'll just keep paying the same and will shave about a year off - so now we are at 7!!

Re-fied to WF 7 years ago FROM another bank and WF STILL offered us a no-cost refi.

Very Happy!!

 

[NJ2Boardwalk]

We are also WF customers. We are planning on moving in 2 years when our HS sophomore daughter graduates. We want to downsize and stop paying 18.5K in property taxes. Just wondering if it would worth it to refinance? Both our credit scores are over 700 but less then 800. Looks like we could save close to $600 per month. Sure is tempting. Right now our APR is 6.375%. Any thoughts?

 

[bellarella]

We are also WF customers. We are planning on moving in 2 years when our HS sophomore daughter graduates. We want to downsize and stop paying 18.5K in property taxes. Just wondering if it would worth it to refinance? Both our credit scores are over 700 but less then 800. Looks like we could save close to $600 per month. Sure is tempting. Right now our APR is 6.375%. Any thoughts?

Yes, it would be worth it if you are eligible for the program people have talked about.

When looking at a refi and a move at the same time the formula is basically if closing costs are less than monthly savings x expected months in the home you should refinance.