No Cost Christian Home Refinance
A no cost Christian home refinance may sound like an inexpensive way to refinance one's home mortgage to a lesser interest rate without paying any of the typical closing costs. But the phrase is actually misleading. There are several costs involved in both the initial financing and any refinancing of a piece of property. For example, the property needs to be appraised and someone has to pay the appraiser for providing this service. It doesn't just disappear. One way or another, the person who is refinancing his mortgage will be paying the closing costs. Instead of paying the closing costs upfront, though, the loan is arranged so that the closing cots and fees are included in the loan product. This can be done a couple different ways. So while it may be true that a no cost home refinance loan may sound like a bargain, the wise and prudent borrower will read all the fine print and understand the total costs involved before signing a new mortgage contract.
The standard rule of thumb for refinancing is that borrowers should consider taking this step when interest rates have dropped by two percentage points. For example, if a home owner has a mortgage with an interest rate of 8% and she can qualify for an interest rate of 6%, then she should begin shopping around for a new loan. In fact, she may want to start with the current lender to see if they will offer her any savings incentive, such as a no cost home refinance loan, in order to keep her as a customer. However, she will want to fully understand the hidden fees in the loan. Of course, another reason for staying with the current lender is that the application process may be quicker than starting over with a new company. The current lender already has a file on the borrower and the property that includes financial and market value information. Still, the home owner will want to consider other options, too, to ensure she is getting the most value for her money.
Typically, closing costs fall into three categories: points, lender fees, and third party fees. Points are expressed as a percentage point of the amount being financed. For example, one point for a $200,000 mortgage equates to $2,000. Discount points are prepaid interest. Lenders may charge discount points for lower interest rates while a no cost home refinance loan with zero points would have a higher interest rate. A lender's origination fee may also be expressed in points. Other lender fees include such items and services as application fees, document preparation, courier services, processing, and underwriting. Third party fees are for such items and services as the appraisal, obtaining the borrower's credit report from a credit reporting agency, pest inspections, title insurance, and any applicable government fees. All these costs have to be paid by someone which just goes to show that a no cost home refinance loan is more a marketing ploy than an accurate representation of facts. Jesus once sent his followers on a journey and warned them: "Behold, I send you forth as sheep in the midst of wolves: be ye therefore wise as serpents, and harmless as doves" (Matthew 10:16). The same warning applies when borrowing money, especially such a large sum as a mortgage. Borrowers need to be as well-informed as possible when making these kinds of financial decisions.
When lenders advertise no cost home refinance loan products, they may be offering a mortgage for no cash out of the borrower's pocket. Any points and both the lender fees and third party fees are bundled into the mortgage. For example, if refinancing the mortgage is $150,000 and all the closing costs added together are $6,000, then the borrower actually borrows $156,000. In this type of loan, the closing costs are subject to interest for the term of the loan or until the borrower pays off the mortgage or refinances again. Another option is for the borrower to accept a loan with a higher interest rate. The principal stays at $150,000 and the $6,000 is paid through the higher interest rate. Usually a no cost home refinance loan of this type will be anywhere from a quarter to a half percent higher than the lowest rate, though it may be even a whole point higher in some instances. In making decisions on whether to pay the lowest interest rate or a higher interest rate in exchange for lower closing costs, experts suggest that borrowers think about the future. If the borrower intends to stay in the home for a long time, she may want to pay closing costs upfront when refinancing. However, if the borrower plans to sell or refinance again in three to five years, then it may be prudent to roll the closing costs into the new mortgage. The borrower can divide the cost of refinancing by the monthly savings to see how long it will take her to break even. This simple calculation may be the key to determining which loan product best serves her current needs.
Other loan options are for the borrower to pay no points, but to pay the lender and third party fees. Or the borrower may pay the third party fees, but not the lender fees. When the mortgage broker tells a borrower that lender fees are being paid, it may be that the broker is receiving what is known as a yield spread premium from the lender. The lender gives the broker the yield spread premium, which is also known as a gain on sale incentive, for using that lender's services and bringing business to that particular company. This is another way that no cost home refinance products work, but this type of situation requires diligence on the part of the borrower. After all, the borrower wants to be sure that the broker is more concerned with her interests and getting her the best possible refinancing product than with getting incentives from lenders that line his own pockets. This is just another reason why it's so important to shop around, to check on a company's reputation with the Better Business Bureau, and to read online customer reviews of different companies before choosing who will get one's refinancing business.
No Closing Cost Christian RefinanceNo closing cost refinance is a way to refinance a home while at the same time realizing the dream of paying off a mortgage early and saving money. A mortgage is more than likely the largest debt a consumer will have but at the same time owning a home can bring the greatest joy. When high monthly house payments with high interest consume resources it is time to consider a no closing cost refinance. Refinancing with a lower interest rate can provide reduced payments, shorter terms and a smaller balance to payoff. Being able to do this with no closing costs makes this even more attractive. Search for a lending institution that also offers a no down payment option.
Consider refinancing a mortgage to help lock in a lower rate of interest before rates start going up again and get cash from a home that has already shown appreciation. Consider using cash for debt consolidation. This will allow one to pay off high interest credit cards and personal loans. With high interest unsecured debt paid off and a lower monthly payment, how can the borrower go wrong? The idea is to use the equity built up in a home to one's advantage. With no closing cost refinance, one can choose a fixed or adjustable rate by determining whatever will pay the highest dividends and save the greatest amount of money. Just remember that when seeking a new agreement, the lender will agree to pay the closing costs in exchange for charging the borrower a higher than normal rate of interest for the life of the loan. Consider whether the benefits outweigh the detriments.
Pray and ask God for wisdom in making financial choices. No closing cost refinance is a wise way to save money now and in the future. Deuteronomy 1:13 says "Take you wise men, and understanding, and known among your tribes, and I will make them rulers over you". Choosing to refinance one's home is certainly wise and demonstrates understanding of economic principles and money saving practices. To get started with a new agreement do some initial research for the type of refinance that will best meet current needs, and then do it. Fill out an online application on a lender's site and see what happens. The Internet offers many websites full of pertinent information and program offerings that can demonstrate some of the best ways to begin and since there is no time like the present, happy hunting!
A no cost refinance loan can save money, if the borrower can get a significantly lower interest rate on their refinanced mortgage. When interest rates drop, many homeowners consider refinancing to receive the better interest rate and save thousands of dollars in interest fees over the course of the home loan or mortgage. And, with the broad mortgage competition across the Internet, many mortgage companies are luring clients by advertising cheap refinancing and mortgage loans. Getting online and browsing the hundreds of loan services available will give a homeowner opportunities to comparison shop mortgage companies and find options that might fit specific financial needs.
There are loans available from a number of mortgage companies who are seeking clients that are candidates for refinancing a home. A no cost refinance loan can save a mortgage holder good money, if the new mortgage interest rates represent a sizable savings. Most mortgage companies charge fees for refinancing loans, and these fees earn the mortgage company a profit. When there is a cheap second mortgage available, the mortgage company can make money by adding interest to the lowest rate available, or the lowest rate that the loan applicant can qualify for. However, with the low interest rates available today, homeowners can refinance for a significantly lower interest rate.
A homeowner may also consider refinancing for debt consolidation. With a debt consolidation loan, the homeowner can refinance a loan and take cash from their equity, if a significant amount of equity is accumulated. With a no cost refinance loan, the mortgage holder takes the cash from the equity to pay off excessive and expensive debt, saving interest on the unsecured debt. Unsecured debt's interest fees are generally much higher than mortgage interest rates. This savings can also represent thousands of dollars to the homeowner looking for a refinance loan for debt consolidation.
The Internet is the fastest growing advertising avenue for Christian mortgage companies and the broad audience that the Internet reaches has mortgage companies scrambling to get their loans and services advertised to the clients wanting to refinance. No cost refinance loans are offered by several mortgage companies online and consumers can find several mortgage companies to choose from by simply browsing. Check out the current interest rate before agreeing to any loan, and be sure to receive a good and solid interest rate offer with the refinance loan. No matter how a homeowner pays for a house, it is most important to dedicate that home to God. "LORD, I have loved the habitation of thy house, and the place where thine honour dwelleth" (Psalm 26:8).