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What are no closing cost loans?
No closing cost loans, available from lenders for new financing or refinancing, are loans in which the lender pays all closing costs. These nonrecurring closing costs (like title escrow fees, appraisal, and lender’s fees) are one-time fees paid when obtaining the loan, and do not include recurring costs (like interest, property taxes, and insurance) paid in your monthly payment.
Why would a lender agree to pay a borrower’s closing costs?
As with most financing approaches, there are trade-offs (and benefits to the lender). For example, the lender might offer you a 6.75 percent loan with one-half discount point, a 7 percent loan with zero points, or a 7.25 gage. Your choice could be based on (1) what you can qualify for, (2) what you’re trying to achieve financially (i.e., short vs. long-term ownership), (3) the amount of funds you have for closing, and (4) what you’re comfortable paying.
No closing cost loans are good when you’re tight on funds for closing or will hold the loan or the property only a short time and don’t want to part with closing money you can’t recoup. You might also select a no closing cost loan if you want to move quickly to obtain a loan (e.g., when interest rates are falling.) They’re especially attractive when refinancing into a lower interest rate. Because there are no upfront costs, your savings are immediate.
If you’re a real risk taker, you might consider refinancing your adjustable-rate mortgage every year with a no closing cost loan-keeping your initial teaser (discounted) rate intact! Rates for this type of loan are often 2 percent or more below 30-year fixed-rate mortgages. | 
