No-Closing-Cost Refinance

1. Who pays the actual cost associated with the refinance?

In a no-closing-cost refinance, you accept a slightly higher interest rate so the lender can pay all closing costs, including government tax, appraisal fee, title insurance and attorney fee, and our commission.

If you prefer a lower interest rate, you may instead pay the closing costs upfront, which are approximately:

$2,650 + 0.6% × Loan Amount

Compared with a no-closing-cost refinance, it typically takes 3–4 years to recover this expense. If you plan to remain in your home longer than three years, paying closing costs for a lower rate may be beneficial. Please reach out if you’d like to explore this option.

2. Why is my rate higher than my coworker’s, even though we contacted you on the same day?

Because the lender covers the costs in a no-closing-cost refinance, they expect to recover those expenses through interest over the next 3–4 years. As a result:

• Larger loan amounts receive lower rates

• Smaller loan amounts receive higher rates

If your current loan was originally closed with us, we can often refinance you with the same lender to avoid the 0.3% Georgia intangible tax, which helps reduce your rate.

Other factors that affect your rate include:

• Credit score

• Loan-to-value (LTV) ratio

• Whether the refinance includes cash-out

3. Will I need to bring money to closing, and how can I avoid it?

You may need to bring pre-paid items, which are not closing costs and are fully recovered after closing.

Pre-paid items include:

• 30 days of pre-paid interest

• New escrow balance, if you choose to have one

Example:

If you close on the 20th of the month, you’ll pay:

• 20 days of interest to your current lender

• 10 days of interest to your new lender

You then skip one month’s mortgage payment, which offsets the 30 days of interest.

You will also receive:

• A refund of your current escrow balance, which offsets the new escrow setup

If you have enough equity, you can increase your new loan amount to cover these pre-paid items. After closing, you may keep or use the refunded amounts to pay down the new loan.

In total, pre-paid items equal:

• Your skipped monthly payment, plus

• Your current escrow balance

4. I’ve already paid my mortgage for two years. If I restart a 30- or 15-year term, how do I measure my savings?

Your monthly mortgage includes principal and interest, with or without escrow. 

Monthly interest is calculated as:

(Current loan balance × Interest rate) ÷ 12

Because refinancing lowers your rate, you pay less interest every month, even if the term restarts.

Another way to compare savings:

You can choose to pay off the loan within the same remaining time—

• 28 years instead of 30, or

• 13 years instead of 15

—then compare the monthly payment difference.

You may use the calculator link to estimate your exact monthly savings.

5. Should I refinance now or wait for a better rate?

No one can accurately predict interest rate movements.

If you choose a refinance with closing costs, you may wonder whether rates will decline further.

But with a no-closing-cost refinance, there is little reason to wait:

• You pay nothing upfront

• You start saving immediately

• If rates drop before closing, we may be able to float your rate down

• If rates fall after closing, you may refinance again after six months

Additionally, once refinanced with our preferred lender, future refinances with that lender avoid state intangible tax, leading to potentially lower rates. Many homeowners have refinanced twice in a single year.

6. What is the difference between a "no-closing-cost" refinance and a "no-cost" refinance?

A “no-cost refinance” typically means you bring no cash to closing. This is usually accomplished by increasing your loan amount to cover both pre-paid items and closing costs.

However, this does not necessarily mean the costs disappear—you may simply be financing them.

If you choose to pay closing costs upfront, you will receive a lower interest rate, which is worthwhile if you plan to stay in your home for more than three years.

This "no-cost" option is also commonly promoted in mailers, TV and social media advertisements.

For more information or to discuss your scenario, please feel free to call us.