Frequently Asked Questions

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A no-cost refinance is different to a regular refinance for one MAJOR reason. On the one hand, just like a regular fee you will still incur title and appraisal fees etc, but on the other hand you will also receive a CREDIT for those fees from the new lender to offset them at close of escrow.  Because the lender is essentially giving you money to refinance to offset what would have been your cost to do the loan the interest rate is a bit higher. That said most borrower's prefer this option.

Simple version: if all the above fees come to $3,000 and the lender gives you $3,000 then that is the definition of a true no-cost refinance.

No, because when it comes time to lock your interest rate the lender CREDIT is never EXACTLY the same as the total fees and so you will always be offered options like the EXAMPLES below when it comes time to lock. 

EXAMPLES:

Interest rate 4.125%

Closing costs you incur =$3,000

Lender CREDIT = $3,500

Your net CREDIT therefore = $500

Interest rate 4%:

Closing costs you incur = $3,000

Lender CREDIT = $2,000

Your net COST therefore = $1,000

Interest rate 3.875%: 

Closing costs you incur = $3,000

Lender CREDIT = $500

Your net COST therefore = $2,500

As you can see in none of these scenarios the lender credit EXACTLY the same as the closing costs.

You should also note that even these examples are over simplified because the closing costs and lender credits are never round numbers.

The lender credits change on a daily basis and sometimes throughout the day. You only know for sure what the lender credit will be when you know the actual credit and you ask me to lock it for you. 

YOU are in control and I would never lock a rate for you without your express permission.

By law all mortgage products have to be underwritten using EXACTLY the same guidelines because mortgage backed securities are saleable items. And just as you would want to know that the next refrigerator you buy complies to the same safety standards as every other one on the market so do the buyers of mortgage backed securities need to know that they are underwritten to exactly the same standards as every other mortgage they buy. Uniformity is the key - and it is the law.

You should also know (as do the buyers of mortgage backed securities) that those online free "credit reports" are not really credit reports per se. Comparing them to the paid versions that lenders and banks are mandated to use is like comparing an old beaten up car to a Mercedes!

And finally, because there are only three credit bureau's and the credit scores and history reported by all three of them are needed to apply for a mortgage and they unfortunately have no competition they have a monopoly, which means they can essentially charge what they want : (

Side note: not so very long ago when tri-merge credit reports were $30 for a married couple, myself and most lenders would pay for the credit reports out of their own pocket. The thought  was that if, say 1 credit pull out of 10 turned into an actual transaction the $300 cost per month cost was do-able. But now the same number of reports would cost $1,000!