Finance Roll

It is often the people that are struggling financially that have a real need for mortgage refinance and could benefit most from it. While this is true, refinancing can be quite costly, as much as three to six percent of the principal balance on your home, which will likely be in the thousands of dollars. This is not something that a lot of people can afford, so what do you do when you don't have a lot of money but you would like to refinance?

Mortgage Refinance on a Budget

It's tough when you know that you need to make a change but you don't have the money to make it happen. Mortgage refinance can cost a lot of money and when you don't have a lot of money the fees associated with it can seem astronomical.

Luckily, lenders have become wise to the fact that those that need to refinance most don't have this sort of money on hand. There are a few great programs out there that will help you refinance without having to pay this amount of cash up front. The programs are an awesome opportunity for people to refinance who may not have had the opportunity to mortgage refinance otherwise.

One option that you may have when you don't have the funds to pay your closing costs is a no closing cost refinance. This is something that many people are taking advantage of because you can refinance your home and just have the closing costs rolled into the financed amount. So, if you were refinancing a loan of $90,000 and your closing costs were $4,000 you would have a total loan of $94,000. This sort of program allows for you to still pay those fees but you don't have to pay them up front. This is a great opportunity to get the lower interest rate or more stable mortgage that you need. While this is called a no closing cost loan, you should be aware that you are still paying them, just not up front. You should also be aware that you are paying more on closing costs because you are also paying interest on the amount that was rolled into the principal balance.

Another option that you may have when you need mortgage refinance with no money out of pocket is the opportunity to simply pay a slightly higher interest rate on the loan. So, if you were refinancing that $90,000 and you had the same $4,000 in closing costs, you would have been given a five percent interest rate in the previous example, but here you may now have a 5.5% interest to help compensate for the fact that you did not pay your closing costs.

These are both great options when you have very little in the way of funds to pay out for closing costs. While this is beneficial when you don't have any money, you should remember that you are still paying more than you would have otherwise because you are paying interest or more interest as a result of the funds being rolled into the principal balance.