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Purchased a home in 2013 and keep getting offers for a "no-cost" refi. Is there such a thing, or is this just a scam?

by selena790 from Huntsville, Illinois. Feb 11th 2016 Reply


William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

It's not necessarily a scam as it is a play on words.. Understand that there are always costs associated with a refinance.. Escrow fee, title fees, underwriting fees, processing fees, recording costs, impounds, etc.. and make no mistake.. if you refinance, you will have these costs.. But it's how they get paid that lenders sometimes deceive their prospective clients... If a refi has total costs of $3000, and you don't bring in that $3000 to close, then the lender can do one of two things.. they can add the $3000 to your new loan, which effectively means "You're Paying For It", or they can raise the interest rate, which in turn makes your loan more profitable, so the lender then takes some of that extra money and they offer you a credit to pay the costs.. but again, "It's YOU Paying It".. in the form of a higher than par interest rate. This type of loan is often pitched as a "No-Cost" refi.. I never use that term because I think it's deceptive, but none the less, its used commonly within this industry. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com NMLS# 226347

Feb 11th 2016
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Barclay Butler (Barclay)
#1 ranked lender in Illinois - 65 contributions

The lender will build the costs into the loan, so you want to use the lender with the best rates. We do no cost loans all of the time, and we do not have any lender costs, so our rates are usually very good .Barclay Butler, 224-420-9990.bbutler@barclaybutlerfinancial.com

Feb 11th 2016
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Kay Cleland (kay@kcmortgagecolorado.com)
#32 ranked lender in Colorado - 210 contributions

Hello Selena,I highly recommend that you shop and review all options. You can find mortgage professionals located in your state by going to www.namb.org and click on Find a Professional to the right of the screen. This site is the national association of mortgage professionals. There are closing costs, and you have the option to include in your loan, include in the rate or bring them to closing.

Feb 11th 2016
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Justin Murray (JustinMurray)
#102 ranked lender in Illinois - 172 contributions

Selena,There is no such things as a no cost loan. Everyone in the transaction must get paid some way - such as the title company, appraiser, etc. Keeping that in mind, the lender will offer you a rate, that is higher than you might qualify for if you pay or roll the fees into your loan, and they will absorb those costs in that way. So it is possible to refinance your loan and not increase the current amount owed. I would consider looking at the option as well as an option that you roll the fees into your loan. Compare them and see what is cheaper in the long run in association with your plans for the home (moving in a few years, etc). I am local if you want to bounce ideas or questions off me in person or through email/phone. Thank you and best of luck!Justin Murray JMurray@WintrustMortgage.com (312) 256-4065

Feb 11th 2016
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