Compared to refinance, purchase or mortgage without closing costs
typically attract higher closing costs
Before opting for a mortgage refinance with no closing
costs, it is essential to learn what costs are excluded and what you still need
to pay. Many banks offer mortgage refinance without closing costs, but each has
its own bucket list of exclusions.
Mortgage refinance with no closing costs usually refers to
‘non-recurring’ costs. Recurring costs such as fees for repayment of the loan,
taxes, and insurance payable at the time of closure of due at impounds are
usually not included as they are mandatory payments whether you choose to
refinance or not.
The non-recurring costs that are included in mortgage
refinance without closing costs are: appraisal, courier, credit report, escrow,
flood certification and monitoring, lender’s title insurance, loan document and
origination fees, notary, reconveyance tracking, recording and wire fee for the
bank documents, and taxes.
The costs that you will need to bear when you choose
mortgage refinance with no closing costs include: flood insurance premium (if
required), grant deeds, associated fees for recording and notary, homeowner’s
(hazard) insurance, impounds, interest, taxes applicable on mortgage and
transfer, real estate taxes, escrow (or reserve funds) for property taxes and
insurance, title policy for the owner, private mortgage insurance (if
required), pest control etc.
Additional costs associated with mortgage refinance without closing costs
include: fees for payoff demand statement, re conveyance, subordination, and
prepayment penalty. Any third-party fees such as change to the title, or death
certificates are to be borne by the customer.
As against refinance, purchase or mortgage without closing
costs typically attract higher closing costs. The non-recurring costs that you
do not need to pay are same as in a mortgage refinance without closing costs.
Exclusions are also same except that you will need to bear the fees associated
with purchase transactions. These typically include title insurance for the
owner and documentation fees for title company documentation.
In addition, whether you apply for a good credit or bad credit no income verification mortgage
without closing costs, you will have to pay an application fee before your
application is processed. This fee is credited back when your loan is approved.
So, if still owed money at the time of closing, the amount is reduced by the
amount of the application fees that you had paid. For a 2-4 family home, $300
of the application fees is reduced. However, if the loan does not fund for any
reason, the application fees is not refunded.
