The financial industry has become increasingly competitive over the past years and lenders are desperate to attract customers, thus forcing their creative media guys to come up with new appealing concepts so as to take hold of as many clients as possible.
There is an old saying stating that “there is nothing really free”, and when it comes to this kind of loans, the saying turns out to be just perfect. So, you want to know what’s the catch with No Closing Costs Refinance? Read on and you’ll find out what lenders have prayed for you to ignore.
No Closing Costs Refinance
Those lenders who offer this kind of loans state that you’d be saving thousands of dollars on closing costs. Well those “thousands of dollars” add up to $3000, $4000 at a most. But if you pay attention to the interest rate they charge on No Closing Costs Refinance Loans you’ll notice that it’s almost 2% above the average interest rate offered by other lenders.
So their claim is only partly true. They are charging no closing costs at all, but what they make you save by not charging any fee, they compensate with overpriced interest rates. If you do your math, unless you’re requesting a 12 months refinance program, chances are that you’ll be paying a lot more than those $4000 in closing costs.
Avoid being tricked
Though ethically questionable, there is nothing illegal about these practices so you need to be particularly careful when looking for a refinance loan. What you may think is an excellent offering, can turn out to be a rip off. Always ask for loan quotes and take your time to analyze them, never rush in and don’t let loan salesmen trick you into signing something you don’t want to sign.
Whenever you hear “interest rate is a bit higher”, find out how higher and whenever you hear “you’ll save thousands of dollars on closing costs”, find out how many thousands. Do all the research you need to, till you find which lender is best for you.
Focus on the Interest Rate
Always remember when it comes to refinance, unless you are refinancing a small amount cause you’ve already paid almost all of your mortgage, you should focus on finding the lowest interest rate available. It is the only true way of saving thousands of dollars with a refinance home loan and anyone who tells you otherwise is lying.
So don’t pay attention to those offering incredible refinance programs at no cost and search the internet for refinance home loan lenders, request quotes and compare interest rates and fees. Once you’ve selected the best deal contact the lender in order to apply for the loan. Take your time to make a conscious decision and you’ll avoid costly mistakes.
By: Mary Wise
Posts Tagged ‘Math’
The Catch Behind No Closing Costs Refinance Loans
March 30th, 2010Refinance Auto Loans – How to Benefit From a Car Loan Refinancing
December 4th, 2009
As much as you may truly enjoy your car, there are things associated with it that are not always that pleasant to deal with. There are bills related to insurance, wear and tear, and, of course, fuel. Most of these things are unavoidable. However, there is one expense related component that may be effectively dealt with: the monthly car premiums.
Now, most will shake their head at such an assessment. How can you get out of paying your monthly car premium? Well, you would not seek to get out of paying the premiums. Rather, you would refinance the loan to make it more affordable. This can then have a significantly positive impact on the purchase of the car. There are two ways this is achieved. The first method is the effect on the monthly premiums and the interest rates.
When you are paying a $400 a month premium, you will be required to pay more than a $300 monthly premium would deliver. This may seem like simple math to most but it is often overlooked. That additionally $1200 per year on the car payments can drain a household budget a great deal. When the household budget is already stressed, the $1200 in payments can be even worse.
Interest rates can also be a huge drain on a budget. Why pay more interest than what is necessary? Those that may have acquired a loan when a credit score was bad will end up with high interest rates. When the credit score improves, the ability to gain a better interest rate is possible. Refinancing can eliminate the need to pay a higher interest rate which is another reason it is so helpful.
By: Hector Milla