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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

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. This would prevent you from paying any cash out of pocket and all 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.

More help from HSH.com


  1. Sandra September 24, 2015 10:56 pm

    I need a mortgage loan for low income disable first time homebuyer in Phoenix, Arizona

    1. Editorial Team September 25, 2015 3:11 pm

      Sandra, Click on the state of Az on our map. The available statewide program(s) will appear below. Here is the URL to Arizona's housing website where you can see all the programs the state offers, if Phoenix offers their own programs, and the contact info for participating lenders: https://housing.az.gov/finance-authority. Thanks for writing in and good luck, Tim Manni, HSH.com

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