With home mortgage interest rates reaching an all-time low again, many homeowners are thinking of refinancing. There are some lenders out there promoting no closing cost mortgages, however, these come with a lot of fine print. Here’s what you need to know about these offers.

At Indigo Mortgage New Mexico, we believe that there is no such thing as free lunch. When lenders promote a no closing cost mortgage, there is more to it than meets the eye. With our experience, 100% of mortgages incur closing costs. Either the borrower pays them, or the lender pays them. Typically when a lender says no closing costs, what they mean is no closing cost out of pocket and that the borrower doesn’t have to come to closing with money, however, all of the closing costs are rolled into the new loan, so the borrower is financing more than what the payoff is. This is the typical way to do a refinance, but some lenders use a play on words.

The second most common situation is the lender does pay all of the closing costs, but here, the lender will raise the interest rate higher so then the lender can afford to pay the closing costs for the borrower, but the borrower will end up paying much more over time. Either way, the consumer is paying for the closing costs.

As you can see, many things come into play when it comes to closing costs. The team at Indigo Mortgage New Mexico recommends you always shop around and shop local to ensure you get the best deal around. Reach out to us with any questions you may have. We are here to help!