Why choose a "low cost" loan when you can simply pay no costs? No closing cost refinances are one of the best ways for you to save money when you refinance. Why pay thousands of dollars in closing costs if you don't have to? With a no cost - no points loan, we pay all closing costs. You keep the $2000 - $3000 you would usually pay in closing costs. That is just the beginning as we will continue to refinance your rate lower if the market moves down with no costs.
Calculator Mortgage Rates Colorado 5280 receives rebates from banks on the loans that we sell. This enables us to pay all closing costs and ourselves without having to charge you! This means that you save the typical fees you would be paying for closing costs. They are not rolled into the loan, we pay them!
There are two components to closing costs:
1) The 3rd party closing costs (title insurance, escrow, appraisal, etc.)
2) Points you pay to buy down your rate.
30 Year Fixed Rate - $200,000 Loan |
Type of Deal |
Rate |
Points |
3rd Party Closing Costs |
Total Cost Paid By You |
Monthly Payment |
Costs - No / Points - No |
6.500% |
$0 |
$0 |
$0 |
$1264 |
Costs - Yes / Points - No |
6.250% |
$0 |
$2250 |
$2250 |
$1231 |
Costs - Yes / Points - 1 |
6.000% |
$2000 |
$2250 |
$4250 |
$1199 |
Costs - Yes / Points - 2 |
5.750% |
$4000 |
$2250 |
$6250 |
$1167 |
As you can see from this example, although the first loan, a No Costs - No Points program, has a higher monthly payment, it has no cost associated with it. This means that you start saving money right away.
If you choose the second loan, a No Points loan where you pay the 3rd party closing costs, you would spend $2250 in closing costs to save only $33 per month. In other words, it will take you 68 months to break even. That is almost 5.6 years before you start saving money! If you have a longer term horizon for being in your loan this makes sense. Our clients typically average 3 to 4 years in their loans because they 1) Move 2) Take Out Cash 3) Refinance into a lower rate.
If you choose the fourth loan where you are paying the 3rd party closing costs with 2 points, you would spend $6,250 in points and fees to save only $97 per month. That is a 64.4 month break-even period or 5.4 years. This makes sense if you have absolutely no doubt you will not be moving or needing to change your financing for any reason.
The most important reason not to give the bank any of your money is flexibility. If we put you in a No-Cost / No-Points Loan and rates drop, we will refinance you into a lower rate with no costs. As the market falls there is no limit to the amount of times we can do this. When the market moves up, you do nothing as you are fully protected.
We have a lower margin that we need to make on each deal and this enables us to be as competitive as we are. We do not need to make as much per deal as most companies because we have a high rate of repeat customers and our lower rates drive strong referrals to us.
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