A No Cost loan is a loan in which all fees and expenses incurred during the refinance (ie…Closing Costs) are off-set by a lender credit applied at closing. That credit would be a function of interest rate (click HERE for more info on selecting an interest rate.) Essentially, the credit would cover “tax, tag, and title” as they say in the car business. Just to be sure we’re on the same page, we are NOT simply ‘rolling’ those costs into your loan amount and then saying ‘Look, you don’t have to bring any money to closing!’
In this way, you can keep more of your equity in your house and NOT have to pay thousands of dollars in costs every time you refinance.
The ONLY items not included in a No Cost scenario would be setting up your Escrow Account and Pre-Paid interest.