Home Ownership

Can you refinance a mortgage with no closing costs?

While closing costs are included in many refinances, Discover® Home Loans offers refinancing with no closing costs.

Refinancing your mortgage lets you to trade in your current mortgage for a new one. You can take advantage of a lower interest rate or use the equity you’ve built in your home with a cash-out refinance.

Often, hefty closing costs are a barrier to refinancing. Closing costs are the fees associated with processing your refinance and can include origination, application, credit check, and/or appraisal fees.

Some lenders, like Discover Home Loans, offer a no-closing-cost refinance, a refinance option that requires no cash at closing.

Wondering whether you can refinance your mortgage with no closing costs?  Let’s look at how a no-closing-costs refinance works so you can decide if a no-closing-cost refinance is right for you.

How a no-closing-cost refinance works 

Some lenders do add a cost for closing a loan with them. Refinancing with Discover Home Loans means there are no application fees, no origination fees, no appraisal fees, and no cash required at closing.

Some lenders charge a closing cost but provide borrowers with the options to include those costs into the principal amount on their loan. Borrowers will then have to pay the closing cost along with the rest of their loan and pay interest on that amount. For example, if your new mortgage is $200,000 and your closing costs are $4,000, your total loan would be $204,000. Some lenders also waive the closing costs in exchange for a higher interest rate. It is important to do your research and determine if your lender is charging you closing costs, whether that is paid at closing or is financed as part of the loan, so you can accurately compare your options.

How much can you save with a no-closing-cost refinance?

On average, closing costs are two to five percent of your total loan. Depending on where you live, this can amount to thousands of dollars and may prevent you from refinancing. On average, closing costs can range between 2-5% of the total purchase price of sales on a home according the Legal Information Institute. 1st lien mortgage refinances between $35,000 and $300,000 on single-family homes, available at the FFIEC Home Mortgage Disclosure Act website.

When you work with a lender that offers refinance with $0 costs at closing, like Discover Home Loans, you can avoid paying these fees so you can hold onto your savings or put them toward another financial goal.

Benefits of a mortgage refinance with no closing costs

A no-closing-costs refinance lets you keep more money in your bank account. This way, you can choose how you want to use your savings — to pay off high-interest debt or remodel your bathroom.

Regardless of how much you have in savings, a no-closing-costs refinance mortgage can help you save money with a lower interest rate and lower monthly payments.

While everyone is aware of the interest charges that come with a refinanced loan, you should remember to calculate the total costs of taking out the loan. Using a refinance with no closing costs can help keep those costs down to keep the overall cost of your financing lower.

Is a no-closing-cost refinance right for you?

Whether a no-closing-cost refinance is right for you depends on your financial situation and goals.

If you don’t have the savings required to cover the high closing costs of refinancing, then a no-closing-cost refinance might be right for you. A no-closing-cost mortgage refinance is also a good option if you want to free up your money for other priorities like paying off high-interest debt or building an emergency fund.

Ultimately, your decision depends on what you can afford and what you’re comfortable with.

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  • Weekdays 8am–Midnight ET
  • Weekends 10am–6pm ET