Entry № 20 · logged Oct 8, 2026Free, no sign-upMoney · Home
The no-closing-cost refinance, priced honestly
Nobody lends for free. A “no-closing-cost” refinance rolls the costs into a higher rate — usually about a quarter point above the standard offer. That trade has an exact price, and it is worth computing before you take it.
The two offers, side by side
Computed on a $300,000 balance with 25 years left. The no-cost loan pays $47.11 more every month and $14,134 more in total interest — versus $6,000 paid once up front. The quarter-point markup is how the lender recovers the waived fees.
When no-cost wins
The $6,000 upfront pays for itself in $6,000 ÷ $47.11 = 127 months — about 10 years and 7 months. If you will sell, move, or refinance again before then, the no-cost offer is cheaper: you bank the $191-a-month savings against the old 7.5% loan with nothing paid to enter.
When no-cost loses
If this is your forever home and the rate will not drop further, paying the costs up front saves $14,134 over the loan’s life. The no-cost option is a subscription you never cancel: $47 a month, every month, for 25 years.
Two impostors to watch
- Rolled-in costs. Some “no-cost” quotes add the closing costs to the loan balance. On $300,000, that is a $306,000 loan — you pay interest on the costs themselves. It is not no-cost; it is financed cost.
- Prepaid-only quotes. A quote that drops only the escrow and prepaid items is not a no-cost refinance at all — those were not lender costs to begin with. Ask for the fee line itemized.
All figures computed for a $300,000 balance, 25 years remaining, current rate 7.5%. The ~0.25-point no-cost markup is the industry-typical range; your lender’s markup decides the exact trade.
Common questions Form RF-20
Is a no-closing-cost refinance really free?
No. The costs are folded into a higher rate -- typically about 0.25 points -- which costs roughly $47 a month more, or $14,134 over 25 years on $300,000, versus paying $6,000 up front.
Who should take a no-closing-cost refinance?
Anyone who will sell, move, or refinance again within about ten years. The $6,000 upfront option only pulls ahead after ~10 years and 7 months of staying put.
Does a no-closing-cost refinance raise my loan balance?
Sometimes: some quotes add the fees to the balance instead of raising the rate. Then you pay interest on the costs too -- that is a financed-cost loan wearing a no-cost label.