EchoBay Expert: On TV, in the newspaper and online I keep seeing advertisements for "no closing costs mortgage refinancing". Are these ads true?
Loyal Reader: Remember when someone once told you that there's no such thing as a free ride? Then there are the sayings that go something along the lines of "don't believe everything you see on TV" and "don't believe everything you read" and so on and so forth.
They all apply to the types of mortgage refinancing offers you are referring to now. Yes, it's true that with no closing costs mortgage refinancing programs you won't pay any up-front closing costs, but that doesn't mean that you're not going to be paying any costs at all.
As nice as your lender may seem, they're not in this business out of the goodness of their hearts; they're in it to make money. Oftentimes, the costs you'd normally pay at closing are rolled into the amount of the loan or the lender will recoup the costs of making the loan by charging you a higher interest rate than what you'd pay elsewhere.
If you really need to refinance and you just don't have the cash to bring to the closing table, then this type of refinancing may be your best bet; but if you have the cash to spare, pay the upfront closing costs and walk away with a lower interest rate or lower principal balance.