$0 Closing costs - What's the real deal? (mortgage broker, refinancing) - City-Data Forum

HX_Guy · 03-14-2008, 04:55 PM

I keep hearing a commercial on the radio about refinancing with 0$ closing costs...they advertise that they actually pay them for you, they do not roll the into the mortgage...or so they say.

Is any of it true? Is it possible to refinance without paying anything out of pocket?

trmc2007 · 03-14-2008, 05:01 PM

highly doubt it. They are there to make money not give it away. It wil be rolled in there somehow, somewhere.

So be sure to read the fine print, before, and when you sign it! nothing like just signing away then realizing you didnt read it an things were changed on you. Not say they all do this, but many do, so just be careful.

Greatday · 03-14-2008, 05:16 PM

More often than not, while the loan is not increased, the interest rate is - somewhere around 1/4 of 1%.

sierraAZ · 03-14-2008, 05:17 PM

Quote:

Originally Posted by HX_Guy

I keep hearing a commercial on the radio about refinancing with 0$ closing costs...they advertise that they actually pay them for you, they do not roll the into the mortgage...or so they say.

Is any of it true? Is it possible to refinance without paying anything out of pocket?

It is. You just get higher than the market rate.

abmiku · 03-14-2008, 07:38 PM

You'll pay for it one way or another...I'm a mortgage broker.

Gretchen B · 03-14-2008, 07:43 PM

Quote:

Originally Posted by HX_Guy

I keep hearing a commercial on the radio about refinancing with 0$ closing costs...they advertise that they actually pay them for you, they do not roll the into the mortgage...or so they say.

Is any of it true? Is it possible to refinance without paying anything out of pocket?

I had a buyer client who used a loan program that was indeed $0 closing costs. This happened to be for a home purchase rather than a refi. I was very skeptical, thinking that there would be hidden fees or a higher interest rate. But everything was very competitive. It was a great deal for my client.

Of course, each lender/loan program is different. It's very important to get a good faith estimate, and check to see what the exact loan rate is and what fees there are. Some of the lenders are being very competitive right now, especially if the borrower has a great credit score.

Just make them put it in writing.

sierraAZ · 03-14-2008, 09:24 PM

Quote:

Originally Posted by Gretchen B

I had a buyer client who used a loan program that was indeed $0 closing costs. This happened to be for a home purchase rather than a refi. I was very skeptical, thinking that there would be hidden fees or a higher interest rate. But everything was very competitive. It was a great deal for my client.

I'd be extremely surprised if the rate were truly competitive... I used builder's financing (essentially the same deal) and the rate would've been higher than market if I hadn't bought it down with the very same fake incentive from them. Same with B of A's deal (at the time I checked it wasn't offered for new construction, but it might be now)... the only difference is that before you would pay higher rate AND closing costs, in which case nobody in his right mind would get his loan from them.

Gretchen B · 03-15-2008, 12:02 AM

Quote:

Originally Posted by sierraAZ

I'd be extremely surprised if the rate were truly competitive... I used builder's financing (essentially the same deal) and the rate would've been higher than market if I hadn't bought it down with the very same fake incentive from them. Same with B of A's deal (at the time I checked it wasn't offered for new construction, but it might be now)... the only difference is that before you would pay higher rate AND closing costs, in which case nobody in his right mind would get his loan from them.

Builder financing is almost always a rip-off. Generally speaking, with loans, if the rate is low, then the fees are high and vice versa. The $0 closinig cost loan program my buyer client used was through one of the BIG lenders (which usually aren't that competitive). I think these guys are out to ace the competition and be the #1 lender in the nation. I even personally called a couple of other lenders I work with frequently (and who are usually the most competitive on rates AND fees) to see if they could beat the rate, and they couldn't. That's why I was so surprised it really was a great deal. You typically don't see these kind of deals - after all the lenders have to make money some way . . .

adiomixr · 03-15-2008, 01:08 AM

In this case it is not rolled in, but you are paying it through the interest rate, though indirectly. This particular broker is paying the costs using part of the YSP (yield spread premium).

http://en.wikipedia.org/wiki/Yield_spread_premium

IMoveU · 03-16-2008, 10:53 AM

As they say on the ranch..."there ain't no free lunch"...I would recommend getting good faith estimates from 3 different lenders before commiting to one. They don't need to pull your credit if you know your score. Once you've decided on a lender, they will need to pull it to send your app to underwriting...I would recommed a lender that does their own underwriting.