1. What is a No Closing Cost Refinance?

A no closing cost refinance means the lender covers your closing costs, either by rolling them into your loan amount or charging a slightly higher interest rate. This calculator assumes the closing costs are fully covered by the lender with no increase to your loan amount or rate.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

Where:

• \( Loan\ Amount \) — Current outstanding mortgage balance
• \( Interest\ Rate \) — Annual interest rate (as decimal)
• \( Term \) — Loan term in years

Explanation: The calculator compares your current payment with the proposed refinance payment to show potential savings.

3. Benefits of No Closing Cost Refinance

Details: No upfront costs mean immediate savings without needing to recoup closing costs. Ideal if you plan to sell or refinance again in a few years.

4. Using the Calculator

Tips: Enter your current loan details and proposed refinance terms. The calculator will show your potential savings with no closing costs.

5. Frequently Asked Questions (FAQ)

Q1: Are there really no costs with this refinance?
A: The lender covers standard closing costs, but you may still need to pay for items like prepaid interest or escrow accounts.

Q2: Will my interest rate be higher?
A: Typically yes, by about 0.125% to 0.25% to compensate the lender for covering costs.

Q3: When does a no-cost refinance make sense?
A: When you want to lower payments without upfront costs, or if you plan to sell/move within a few years.

Q4: What's the break-even point?
A: With no closing costs, you benefit immediately from any payment reduction.

Q5: Can I get cash out with this refinance?
A: Usually no - most no-cost refinances are for rate-and-term changes only.