X

Have you checked out HSH's new Home Value Tracker? See what's happening with home values in more than 400 metro areas!

Have you checked out HSH's new Home Value Tracker? See what's happening with home values in more than 400 metro areas!

Can I refinance for free?

Q: Are there refinance loans that truly do not cost you anything?

A: You can find a mortgage refinance which will cost you nothing out of pocket, but the trade-off is that you exchange paying no fees for a higher-than-market interest rate. This is because there are legitimate fees which must be paid in conjunction with granting you a loan, and the lender will pay them on your behalf.

You still might need some cash on hand

You might find that you'll need some cash to fund new escrow accounts for things like taxes and insurance for the new loan. However, when the old loan is closed out, you should expect a refund of the unused portion of those from the old loan's escrow accounts, so you'll get your money back, if a little delayed.

Provided the increase in the mortgage rate doesn't devalue your refinance too much, there are some good reasons to have the lender pay the fees:

  1. You might not have much cash on hand
  2. You might not want to commit the cash you do have on hand to your mortgage transaction
  3. Generating the cash might include a taxable event, such as by selling stocks

Another option: Use your home equity

Also, there is another route you can take if you have some equity in your home -- you can pay the refinance fees by increasing your loan balance a little bit. Called a "low cash-out refinance", this would prevent you from paying any cash out of pocket and allow you to get the lowest possible refinance rate.

Refinance calculator: Decide which option is best

Deciding which option is best certainly depends on your personal situation. And when it comes to financing your refinance, you have more than one option. To help you decide which refinance option is best, to see how these refinance choices could play out over the years, utilize our refinance calculator which will plot out your savings on a side-by-side basis.

Related: What does a refinance cost?

Ask the expert
Keith Gumbinger
Keith Gumbinger
Mortgage Expert
Vice President, HSH.com
About Keith: Mortgage market observer and analyst with 35 years experience... (more)
Submitting your question...

Question received! Check back later to see if your
question gets published.

Q: Can my friends and I buy a house together?
JUL 18, 2021
A:

The answer is "yes," you can certainly all buy a house together.

Read More
Q: What is the difference between "rate" and "APR"?
APR 26, 2021
A:

APR is perhaps the most misunderstood part of mortgage finance. "Rate", or more properly "contract interest rate" is the actual rate of interest you are being charged...

Read More
Q: How do I find out who owns my mortgage?
MAR 15, 2021
A:

The owner of the loan is most often the "investor" -- the entity who put up the actual funds to make your mortgage happen.

Read More
Add to Homescreen?
X
X
Install this web app on your phone :tap and then Add to homescreen