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VA Loan No Closing Cost Refinance Miami

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VA Loan NO Closing Cost Refinance: An Added Benefit in Miami.

VA Loan No Closing Cost Refinance. Besides the advantage of requiring no down payment for qualified VA borrowers in Miami, there’s also a distinct advantage for the borrower regarding closing costs. The veteran is limited to the types of closing costs that may be paid, helping the veteran save money at the closing table. But if there are costs associated with a VA mortgage and the veteran isn’t allowed to pay for them, who does?

The Types

VA Loan No Closing Cost Refinance Miami

VA Loan No Closing Cost Refinance Miami

VA loan no closing cost refinance a common way to remember which costs a veteran is allowed to pay for is to remember the acronym ACTORS. That stands for:

  • A  Appraisal
  • C  Credit Report
  • T  Title Insurance
  • Origination Fee
  • R  Recording Fee
  • S  Survey

These are common charges found on most every VA mortgage and while they can vary a bit by an amount; these fees are the ones that can be paid for by the veteran. But what about these charges?

  • Attorney
  • Underwriting
  • Escrow
  • Processing
  • Document
  • Tax Service

These fees and others are an example of charges that the veteran is not allowed to pay. Even though the VA lender requires a processing and an underwriting fee in order to approve the VA loan, the veteran may not pay for these charges and any other fee deemed “non-allowable.” So if the veteran can’t pay them, who does?

The Seller Can

Non-allowed closing costs can be paid by the seller of the property and is typically the initial method of dealing with such charges. As part of a sales contract, the buyer can say, “We’ll pay you $200,000 for this home as long as you pay for $3,000 in closing costs.” VA Loan No Closing Cost Refinance

Paying for a buyer’s closing costs is considered a seller concession, and is limited to four percent of the sales price of the home. If a home sells for $200,000, then the seller can only pay $8,000 of the buyer’s costs.

Such concessions can be used to pay for the buyer’s VA funding fee, loan costs, property taxes and insurance among others.

The Agent Might

A real estate agent representing the buyer can contribute toward closing costs in the form of a credit at the closing table. Real estate agent commissions are paid for by the seller of the property and typically represented as a percentage of the sales price.

When a real estate agent brings a buyer to a seller and there are two agents, the listing agent and the selling agent, the commission is typically split between both agents. If the sales commission is six percent, each agent gets three percent each for their services. Some states don’t allow the practice of an agent contributing toward a buyer’s closing costs so check to see if it’s okay in your area.

The Lender Can

VA Loan No Closing Cost Refinance Miami

VA Loan No Closing Cost Refinance Miami

VA Loan No Closing Cost Refinance. The lender can offset part or all closing costs with a lender credit. Lenders can offer a credit to a borrower by adjusting the borrower’s interest rate. It’s like paying a point to get a lower interest rate but in reverse.

For example, a VA borrower applies for a 30 year fixed rate VA mortgage and is offered a 3.75 percent rate. VA Loan No Closing Cost Refinance offers the buyer a lower rate if the buyer pays one point or one percent of the loan amount. The choice is 3.75 with no points or 3.50 with one point.

In the other direction, the lender can offer 3.75 percent with no points and 4.00 percent with one point credit to the borrower. On a $200,000 loan, the lender can increase an interest rate by about one-quarter of one percent and the borrower gets a $2,000 credit toward closing fees. VA Loan No Closing Cost Refinance

The Borrower Can

The seller can pay, an agent can pay, the lender can pay but the borrower also has one more way to pay non-allowable closing costs in Miami. Recall that an origination fee is an allowable charge. An origination fee is represented as one percent of the loan amount.

In lieu of charging the borrower on, allowed fees, the lender can charge a one percent origination fee instead of itemized non-allowable charges for things such as attorney or underwriting charges.

VA loan no closing cost refinance, are indeed a different breed compared to FHA or conventional loans, especially with regard to who is responsible for any particular fee. If there are any questions about who pays for what, those questions should be asked directly to your loan officer. VA costs can be confusing, there’s no need for them to be.

Meanwhile, No Closing Costs

Is it possible to do a “no cost VA streamline refinance” in Miami?

Kind of.

First, let’s review a similar term that many advertisers in Miami use in their marketing: “no out of pocket closing costs”. There is just a slight difference in words but a big difference in meaning between “no cost” and “no out of pocket closing costs” when it comes to the VA streamline program.

No Out Of Pocket Closing Costs

When you see an advertisement for a VA streamline in Miami with “no out of pocket closing costs” or “no out of pocket costs” it is very often true; the lender will be able to offer you a VA streamline refinance, roll all of the closing costs into the loan and you don’t have to bring the closing costs to the table at closing. If the lender structures the loan where all the closing costs are rolled into the loan, then you don’t have to bring any money to closing. This is fairly common with the VA streamline program. One popular question that many people ask is “can I get cash back at closing” and the answer is no – but at least you won’t have to bring any cash to closing. VA Loan No Closing Cost Refinance

No Closing Costs

When you see a lender advertise a “no closing cost VA streamline refinance” be a little more careful. It isn’t that it isn’t possible – it is just a little rarer. A no closing cost streamline refinance means that the lender will pick up the closing costs in exchange for a slightly higher rate on your loan. Again, it isn’t that it isn’t possible – but the interest rate environment has to be just right or else the math won’t make sense for the lender.

No Closing Cost Lenders

No closing cost lenders often are mislabeled. And they should be called “no out of pocket closing cost lenders”; because they roll your refinancing costs into the loan. While getting both a no closing cost and no out of pocket closing cost VA streamline refinance is possible; you just want to make sure that you are extra careful at noticing the difference between the two.

Shopping multiple lenders and getting multiple written rate quotes is always a good idea in Miami; start here by submitting your information and get matched up with a great VA lender today. VA Loan No Closing Cost Refinance

How a VA Loan No Cost Refinance Really Works?

You may have seen ads for a “no cost refi” loan lately; a mortgage program that promises no fees or out-of-pocket expenses when you refinance your existing mortgage.

While this type of offer is by no means a new concept in Miami; it’s definitely a subject worth visiting to ensure people understand what they’re getting when they choose a no cost refinance option.

What Is a No Cost Refinance?

In Miami, a no cost refinance is essentially a loan transaction in which the lender or broker pays settlement costs. Including typical lender fees such as processing and underwriting fees, the appraisal fee, and loan origination points; along with third party costs like title/escrow fees and so on.

You may be asking yourself how banks and lenders make up for the absence of fees that normally must be paid during a refinance (or purchase) transaction.

Well, assuming the lender actually pays your closings costs; doing so will bump up your interest rate. Sometimes dramatically, in order to make up for the missing fees that are typically charged at closing.

No Cost Loan = Higher Mortgage Rate

It’s a simple trade; pay nothing now, but pay more over the life of the loan in the form of a higher mortgage rate.

For some borrowers, a no cost loan is a necessity because they don’t have the required funds to pay all the fees at closing; but for others, it’s a decision that will need to be made during the loan process. VA Loan No Closing Cost Refinance

Keep in mind that mortgage brokers can also set up a no cost loan for you; adjusting their yield-spread premium (commission) to the point where they make enough money to offset the fees associated with the loan.  This is now accomplished by using a lender credit.

Tip: The terms of no cost loans will vary by lender IN Miami. Some programs may cover ALL closing costs.While others may still charge you for certain third-party fees; such as appraisal/inspection, title, escrow, and even mortgage points!  Be sure to pay attention to what fees are and are not covered. VA Loan No Closing Cost Refinance

Is a No Cost Refinance a Good Idea?

This is the point where you need to ask yourself; what you plan to do with the property and the mortgage?

If you’re planning on moving or upgrading to a more expensive home in just a few years, or if you’re the type who refinances often; paying upfront costs for a lower interest rate will probably be a losing endeavor. For you, a no cost loan may actually be a good choice.

After all, there’s no reason you should pay for a lower interest rate if you’re only going to turn around and sell/refinance a few months/years later.  You’ll never realize the savings!

But if you plan to stay in the home for five or more years (or whenever the break-even point takes place); it would make sense to pay a little more up front for future savings. Why? Well, that $200 discount each month might ease your budgeting woes in the future; and amount to some serious savings if you stick with the mortgage for the long haul. VA Loan No Closing Cost Refinance

Remember, no cost loans aren’t inherently good or bad.

They aren’t a scam and they aren’t magic.  The money is either paid upfront or over time.  Their associated benefit or cost will really depend on your unique financial situation. And what the fees are, and what the interest rate impact will be.  Make sure you do the math and compare options before signing on the dotted line. VA Loan No Closing Cost Refinance

Also watch out for banks that “bundle” your closing costs on top of your loan amount; increasing the size of your loan, effectively making it a “no-cash loan.”

Though you may avoid out-of-pocket expenses and upfront fees, these costs are not lender-paid. And the loan is not a true no cost loan.  You simply pay the fees over the life of the loan instead of at closing.  And you’re stuck with a higher loan amount to boot!  Not necessarily a great deal.

For the record, you can also get a no cost loan for a home purchase.

Though it might take a combination of a lender credit, a credit from your real estate agent; and seller concessions to make it all work.

Lastly, don’t forget to negotiate.  It might be best to ask the lender what their best rate is; then tell them you want a no cost option as well.  That way you can see what the difference is without showing your hand.  If you tell them you want the loan at no cost; you may never know how low the rate could have been. VA Loan No Closing Cost Refinance

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