Question by honeybaby729: refinance mortgage offers, “no costs to you” are these legit?
I need to refinance my mortgage very soon. For the past 6 or so plus months my mail has been flooded daily with offers from various mortgage brokers or lenders offering me a deal of a lifetime. Many say they are offering me refinancing at no cost to me. This sounds a bit fishy, I doubt anyone is willing to help me at no costs. Is there any truths to these offers? I don’t want to waste time contacting these companies and filling out applications if they are not true. Any thoughts? Thanks !
Best answer:
Answer by shamieya
It is legit, there may be no out of pocket costs to you if your broker will be making a nice profit off of your refinance- they will pay for stuff themselves. there will always be fees though.
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they are not good, when you need to refi, go to a bank that does home loans like wells fargo or a mortgage co like Legacy. Also Eloan is a good place to see rates and get advice.
Somebody is making money, so you are right in being cautious..
Do not be trapped , nothing is free in this world.
there is no such thing as ‘no cost’ to you.
they may charge NO closing costs, but you will pay a HIGHER interest rate. You may have a LOW interest rate…but your closing costs may be HIGH.
Either way…you will need to see who can balance the fees, and the interest rate. Programs are helpful, and you may want to refinance for other reasons besides the interest rate.
If your credit is low you may want to work with a broker. They normally can give you credit advice to fix your credit that will help you refinance in the future again…and may find yourself with better auto loan offers, credit card offers, etc
It is legitimate, however when they say no cost to you, they means they won’t charge you for giving you advice about how best to refinance your mortgage and they will suggest the cheapest mortgage options with the best lenders based on the details you give them.
There will however be whatever costs the lender you finally choose charges. The middleman who finds the lender from you gets paid by the lender hence he doesn’t charge you.
It’s not that you won’t be paying anything. But its a decent thing to look into because these guys will give you the best offer available for you, without you having to shop around and check out the terms and conditions of each individual mortgage vendor.
These no cost loans, mean no closing costs will be paid by you. But, the lender will give you a higher interest rate so they can afford to pay for those closing costs. Ultmiately whether you like it or not it will end up coming out of your pocket. Typically unless you plan to sell or refi again in the near future it is worth paying the closing costs up front and taking a lower interest rate. It may cost a few thousand at first, but you will end up saving money in the long run if you plan on staying in the property for more than a few years.
I actually just wrote about these no cost loans on my blog. Here’s the link, just in case you want to read about them. http://blog.360.yahoo.com/cybergod763. If not, the short answer is that people have to get paid, in the case of a no cost loan, your interest rate is higher and the loan fees are paid by the yield spread.