Refinancing with no closing costs: Top pros & cons to consider

by Audrey L. D. Petschek 03/10/2025

Refinancing your home can have a plethora of benefits. Among lowering your monthly payment, refinancing your home can also allow you to borrow against your home’s equity. However, refinancing in the beginning can have significant closing costs, such as application fees, loan origination fees, mortgage insurance and interest - especially when involving mortgage points.

Your new mortgage’s closing cost could have upfront fees of anywhere from 2% to 5%. However, there is another type of refinancing option available for homeowners who’d prefer to roll their closing costs into their monthly payments.

Here are the pros and cons of no-closing-cost refinances:

Pro: No closing costs

With no-closing-cost mortgage refinancing, you typically don’t have any upfront closing costs. In fact, your closing costs are rolled into your monthly mortgage payment, so you don’t have to worry about interfering with your current budget.

Con: Higher monthly payment

Because there are no upfront closing costs for a no-closing-cost refinance option, you may have higher monthly payments than if you’d chosen a cost-refinance method. However, higher monthly payments may not be the agreed term for rolling your fees into your new mortgage. Higher interest rates or a longer loan term are also viable options.

Pro: Immediate budget impact

If you’re taking out a no-closing-cost refinancing loan, you’re probably in the market for holding on to your budget at that time. This refinance option allows you to maintain your current budget and can give you the cash needed for other projects, responsibilities or emergencies.

Con: Monthly budget impact

If you are saving for something or budgeting for a big project, you could be set back a bit by the amount you’ll have to pay on your new monthly mortgage payment. Because the fees are rolled back into the loan itself, your monthly payments may be higher than originally anticipated, putting a hurdle in your savings plans.

Regardless of your reasoning for pursuing a no-cost-refinancing option, knowing both sides of the coin can help you make a more informed decision. Both types of refinancing are great options, and if you have questions about which to choose, try speaking with your agent or a finance professional employed with your current mortgage lender.

About the Author
Author

Audrey L. D. Petschek

Hi, I'm Audrey L. D. Petschek , Broker, owner of Blue Horse Realty, LLC and I'd love to assist you! 

I have over 20 years of experience, sales over 100 Million dollars and accolades in the Industry including:

 "Best of the Best",

Top 1% out of 62,000 Agents Internationally,

 8 xs Agent of the Month in a single year,

 International President's Elite. (Top percentile for producers)

 In addition, I have been named 

10 BEST Real Estate Agent in Connecticut for Client Satisfaction for 2018, 2019, 2020.

 I offer Blue Ribbon Service to all my clients!

 I cover all of Fairfield County and into Litchfield and New Haven Counties and travel further for Equestrian properties and land acquisitions. 

20 years on the Greenwich Board of Realtors, I also hold higher designations: 

Certified Residential Specialist , CRS, 

Accredited Buyer Representative, ABR

Seller Representative Specialist, SRS,

 Graduate of the Realtor Institute, GRI and

 CHP, Certified Home Specialist.

Let me put my expertise and Blue Ribbon Service to work for you!