What is a zero-point/zero-fee loan and what are its benefits?
With zero-point/zero-fee loans, you can refinance without points or fees such as appraisal, escrow, or title fees, while your loan balance stays the same. And you can refinance using your zero-point/zero-fee adjustable loan multiple times a year. This operates on a rebate (or “yield-spread” or “service-release premium”) pricing basis where you essentially pay the closing costs with a higher rate for cash up front. However, these loans eliminate out-of-pocket up front costs and allow you to refinance for future any small future rate drops. But the disadvantage of is that the rate you pay will be higher than it would be with the points and closing costs, which could cost you more money if you keep the loan too long. It depends on the refinancing rates drops in between. Also, make sure that the lender pays for closing costs from rebate points and not from an increase in loan amount. As a rule of thumb, zero-point/zero-fee loans are generally a good idea if rates are predicted to fall and
