No closing cost refinace loans

With the new government regulation of the lending industry, it has become more difficult to find lenders that will offer a no closing cost refinance loan.  Bank of America, formerly countrywide, still offers it depending on your credit score.  Typically a no closing cost loan costs more over the term of the loan.  The lender will build your closing costs into the loan.  so for example, if you need a loan of $200,000 and your taxes, fees, insurance, and other closing costs come to $6,500; then you will simply have a total loan for $206,500.  This allows you to take advantage of lower interest rates with little to no cash out of pocket.

So how will banks make money?  The banks will make more money by offering this loan, because they typically charge a slightly higher interest rate.  This means over a 30 year loan, they will make tens of thousands of dollars more.  This is not always the smartest long term strategy for a person looking to refinance; but if you're not going to be in your house for more than 5-9 years, and you stand to make money from selling your home, this may be very advantageous for you.