Description of Massachusetts No Cost Refinance Loans
Massachusetts No Cost refinance home loans are exactly what the name implies…refinance loans that do not require the borrower to pay any closing fees. A true No Closing Cost refinance does not wrap the closing costs into the loan amount. Rather by accepting a slightly higher mortgage rate (usually 0.125% – 0.250% higher for fixed rate mortgages), the mortgage company generates the funds necessary to pay the closing costs on your behalf.
It is important to note that getting a Massachusetts No Cost refinance home loan does not guarantee that you will not need funds for closing. In addition to closing costs, funds are also needed for prepaid interest and to fund your new escrow account (typically for property taxes and homeowner’s insurance). This additional amount often can be financed into the loan amount for no out-of-pocket expense at all!
Advantages of Massachusetts No Cost Refinance Home Loans
- Ability to refinance with no closing costs allows a borrower to realize immediate monthly savings
Disadvantages of Massachusetts No Cost Refinance Home Loans
- Higher interest rate than if closing costs were paid out of pocket or wrapped into loan amount
Borrowers Best Suited for a MA No Cost Refinance Home Loan
- Do not have money available to pay closing costs
- Intend to move in the next few years such that break-even point for paying closing costs would exceed remaining time left living in home
Borrowers Least Suited for a MA No Cost Refinance Home Loan
- Intend to live in home for a significant amount of time and can realize greater interest savings by paying closing costs