Re-finance my mortgate with NO closing fees? Scam?

[Tim_T-Bonham.net]

@Quercus

Just to be clear: the reason you’re paying no closing costs is because the interest rate is slightly higher than you’d get if they weren’t paying the closing costs. If you call them back and say “That’s a nice offer, but what rate will you give me if I cover closing costs?” you’ll get quoted a lower rate

Also, the actual closing costs to the bank are lower. House inspection was done when you got your original loan, so it can be minimal or none now. A title search was done already. And credit checks were done on you, plus they now have several years of actual experience with your mortgage payments. So they can skip a lot of the normal closing expenses.

[muldoonthief]

@t-bonham@scc.net

Also, the actual closing costs to the bank are lower. House inspection was done when you got your original loan, so it can be minimal or none now. A title search was done already.

Do you mean appraisal? That almost always has to be redone - it’s all about comparing your house to recent sales in the area to get a current resale value of the house. It’s totally market dependent, not house dependent.

Of course, since they’re your current mortgage co, they’re on the hook if you default anyway, so maybe they can skip the appraisal since their risk is the same if you refinance or not.

[astro]

@Keeve

I consider myself a pretty cynical person, and after having read all the above, there are still a couple of things I’m wondering…

The banks are (or will be) under pressure from various directions to help out their customers who are having trouble paying their mortgage in this economy. One way to do this is with drastically better terms for the people who are unemployed or underemployed. The banks are reluctant to do that, so I’m wondering if this “Chase Mortgage Rate Reduction Program” is an attempt to make themselves look good at a smaller cost. In other words, even if they would truly get less money from Topologist and others, it would be much less expensive than some of the more drastic measures that some people have been clamoring for. And now, Chase can say “Look how many people we have in our Chase Mortgage Rate Reduction Program!!!” without it costing all that much.

Along the lines of the above, the really cynical side of me is wondering: If you accept this offer, will it disqualify you from something even better?

From what I’ve seen refinancing people who are on the edge of going down the bankruptcy rat hole so they can save $ 50 to few hundred a month will rarely save them. There are too may other debts clamoring for attention at that point.

[computergeek]

I looked into this last night with Wells Fargo (who holds my mortgage) as their website indicates a refinance special where current customers can refinance with no closing costs. I talked to an agent today and the big catch is that the special is a government program and condos and townhomes (which is what my home is) are not eligible for some unknown reason.

[needscoffee]

I use a mortgage broker who finds the lowest rates with no closing costs for my last refi. All costs were included in the refinance. He is on the other side of the country from me. All was done by phone and FedEx. Very little paperwork. His office arranged for the home inspection (cost included), and set up an appointment for us at a local title company to handle the final paper signing. The mortgage is with a large well-known company, we reduced our interest rate considerably, and lowered the term by 5 years. You don’t have to stick with your own current mortgage company to get a no-closing-cost refi.