Here's a handy little document I found to help you key in on potential tax deductions.
https://www.cohomesandloans.com/101-real-estate-agent-deductions/
ps- By no means am I a tax professional, and this isn't tax advice, so be sure to get advice from your CPA before filing!
RJ Baxter
Branch Manager
303-670-0137 – Direct/Text
720-398-3314 – Fax
165 S. Union Blvd #400
Lakewood, CO 80228
Transcription:
How do mortgage lenders do no closing costs refinances? With Denver mortgage rates near all-time lows, you might be looking into refinancing and have that question on your mind. I'm going to talk about that and more in this week's tip of the week. My name's RJ Baxter with Fairway Independent Mortgage. Let's talk about it.
There's all these entities involved with a mortgage transaction. Let's think about it. There's the mortgage lender, of course. Oh, the title company. They handle the collection of all the funds and the distribution of the money. They handle your actual closing. Oh, and if you're on the East Coast or some other states, there might be an attorney involved. Then there's the county. The county, they want to charge something to record your deed. They want to collect your property taxes. Oh, there's the homeowners insurance company. Oh, there's also the appraiser. A lot of times you have to get your house appraised on a refinance.
Then there's all these behind the scenes things that you don't typically see as the consumer. There's the credit report. You have to get your credit pulled. There's what's called a flood certification. Even if you live on the top of a mountain, every transaction requires that we pull what's called a flood certification to verify if you're in a flood zone or not. There's all these ancillary services, and every one of these entities, they charge a fee. Now, whether you pay it or not, the fee is there. The fee doesn't just go away.
How do lenders do no closing costs refinances? The answer is lenders can raise your interest rate a little bit to then extend to you a credit to offset the fees. You might be thinking, "Why would I want a higher interest rate?"
Let's just use an example. Let's say the going rate in the marketplace, just to use a number, is 4%. That might be the rate where you pay the "regular closing costs". On any given day, the lender might charge, let's say, a quarter percent higher. By doing that, they can give you a 1% credit to offset your fees. Let's say, for this example, they raise the rates to 4.25%. At that rate, they can give you a 1% credit.
Now, if you have a $400,000 loan, let's say, that's a $4,000 credit. That's going to cover all of your fee, excuse me, all of your fees and then some, which might make sense in some circumstances. Let's say, for example, you're not going to have the loan for the long term. Maybe two, three, four years. It might make more sense to pay the fee or not pay the fees and pay a little bit more interest each month because of the cost of the interest over that short period is going to be less than the fees.
This is how lenders do no closing costs refinances. And it goes the other way too. I don't know if you've heard of the term buydown, but you can go the other direction and pay more fees in the form of discount points to obtain a lower rates. In this example, you might pay a 1% fee to get a 3.75% rate.
That's just a little bit more about how lenders can do no closing costs refinances. Now, if you would like to take a look at your options and see if the no closing costs refinance makes sense for you, or if it makes more sense to pay fees or maybe even pay a buydown, I'd be happy to take a look at that for you, give you an analysis, so you can look at both the short and long term benefits of each option side by side so you can make the most informed financial decision. Just give me a call in the office if I can help you out with that. My is RJ Baxter, Fairway Independent Mortgage. You guys have a great rest of your day. I appreciate you watching.
