How long has it been since you had a good night’s sleep? One day…a week…a month; how long can you keep this up? Every day since you came to the realization that there needed to be an increase in funds, you have been trying to find a remedy to fix this. Every idea turned out to be flawed and could not think of any legal means to achieve this. Finally, with very little sleep and ready to acquire extra money no matter what the price would be, a friend suggested to look into refinancing your home. Just the fact that it wasn’t against the law sounded promising and after several days, you became your old self again. Yet, this process was still unfamiliar as well as having little money to cover any closing cost fees. Being the inquisitive person that you are, you have found your way here among many other homeowners who need to understand the process of refinancing. Also, is there a way to obtain a refinance without having to pay for any additional costs up front? The answer to that is known as a no cost refinance; however, it may not be suitable to everyone. In order to see if this is the solution to your financial dilemma, let’s talk about what is involved with this process as well as to see if you can benefit from it.
How do I know if a No Cost Refinance can benefit me?
One aspect of being human is not having the luxury of wasting time. Whether it is a few hours, days or even weeks; our lifespan is limited to begin with and wasting time doing something that turns out to not being meaningful is unacceptable. The same can be applied to those seeking out to refinance their home as it can take time to complete and if it proves in the end to be unsuccessful, then even more time must be used to remedy the situation. Looking at a no cost refinance as a means to acquire extra income while diminishing the amount of monthly payments sounds like a great idea; that is, if this process best suits a homeowner’s need. The question now becomes how can someone who likes this type of a refinance figure out if it will benefit or makes things worse of a mortgagee.
In order to make a valid decision, you should ask yourself if the only reason I am not taking out a new mortgage is the result of the closing costs being too high. If this is the only reason, then this type of a refinance is the solution. Just keep in mind that you will need to make up the costs at another time, so be prepared in your budgeting to allocate funds with this purpose in mind. Let’s say that your lender decides that the rate of your new mortgage will be 2.75% as well as having to pay closing costs. Another option you can take is to do away with closing costs but increase your rate to 3.135%. Depending on their finances, the mortgagee can determine which option will be the most beneficial. Of course, a third option could be that the lender just waives off closing costs and offer a competitive rate percentage; however, this does not happen very often.
Does the Time Frame of the new Mortgage have any Influence over the Refinance?
Another way to figure out if closing costs are better to pay up front or later depends on the time frame a homeowner plans to stay in their home. For example, if the mortgage rate is 7 percent and the owner plans on staying for another four to five years, this sounds to be a good time not to pay any closing costs. After all, why put down an enormous amount of money upfront for a home that is not for a long-term investment? Besides, the money could be used for other things such as for renovating the home.
Now let’s look at an individual who plans on making this home last for the long haul. This scenario would be a good idea to actually pay closing cost upfront rather than to have it added to the monthly percentage rate. If a homeowner is offered a loan of $150,000, there are two options to make a decision on. The first offers a rate of 3.75% with closing costs totaling $3,500 while the other has no closing costs but a rate of 4.25%. The higher rate of percentage would cost $43.24 more a month and after thirty years would total $15,567. Obviously, a long-term mortgage would benefit the borrower to pay the closing costs upfront in order to save money down the road.
As our conversation comes to a close, I hope you leave here with more confidence than when you arrived. Being that you are in need of extra funds with no way to resolve your financial problem, you came here to see if a solution could be provided for you. When one was, your confidence still was in check as to see if this one can suit your needs. Hopefully, you came to realize that a no cost refinance will help homeowners who have a financial issue to overcome that will beneficial in the present as well as in their future.