Closing Cost are generally the most misunderstood part of a refinancing process. Most Lenders advertise no closing costs, and often quote rates that are anywhere from 1/4% to 1/2% below actual daily market. It is generally a rule of thumb, that if a Lender is using costly media to advertise, that they have a battery of Loan officers available to field the calls, and since they are not presently regulated to actually do the loan at the same terms and rate of the good-faith estimate, a lot of borrowers find themselves locked in at the "eleventh hour", with a loan scenerio that is more costly or higjher in rate than they originally were meant to believe. There are always closing costs, federal Lending Guidelines require an Escrow to handle the transaction, to make sure that the monies trancend from the Lender to the title to pay off the old loan(s), and to make sure that they are recorded, and that there are no liens that would proceed the recording of a new first traust deed. I have seen escrow fees of anywhere from $500 to $900 for a typical refinance. The new lender must have a new Lenders Title Policy, this protects their new interest in the property, the fees are set in a schedule and vary slightly from Title Company to Company, loans under $100,000 incur a flat $400 fee, then it increase about $200 per $100,000 after that. There is a processing fee, some lenders do not disclose this and pay it from the origination fees or points, or from market rebates. Processing prepares the documents, locks the loan, submitts and follows the file, making sure that the lenders requirements are met for producing an approval, conditions for loan documents and funding, they generally coordinate the loan process with the Title Company and the Escrow Company. We charge a flat fee of $425 for processing. Other costs will include a Lenders fee,of any where from $295 to $995, for the underwriting process, and all the detailed cost of the logistical production and origination of the required documents and funds. Notary fees cover the signing of the final loan documents and vary from $125 to $200 depending on the complexity of the paper work. Recording and reconveyance fees fees can be anywhere from $25 to $200. Lenders endorsements, tax service, courrier fees are common, anothe $200 or so. Then there are pre-paid items, generally not disclosed as closing costs, since they are funds that are pre-paid to the lender, usually added to the "back end" of the principle loan amount. These cover interest to payoff the old loan, pro-rated to the funding of the new loan, and interest prorated to the new lender to cover the time to the first payment due. Impounds fot property taxes, and homeowners insurance, and if required mortgage protection insurance to protect the lender from equity shortgages in case of a default. When a borrower gets a no cost loan, the cost is absorbed by the borrower taking a higher rate of interest than what is available at "par-Prime pricing", in other words when you walk into the bank & see the adversment for the daily 30 year fixed rate, you might see 5.5%, then under or next to that a rate of 6.18% APR, that rate would reflect par market pricing, meaning the lender can get those funds from the market that day for 0 cost, since they are not making any money they need to charge closing cost and origination fees to the borrower, which is reflected in the higher APR. using the same day example of rates, a no cost loan might be advertised as 6%, the lender depending on the size of the loan coul;d sell that loan in the secondary market, and make 3%, so if "REAL" closing costs were $2800, and the loan amount was $300,000, the lender will make $9,000 selling the loan, subtracting the $2,800 closing cost, they will take a profit of $6,200 from the transaction.The untold truth is the borower will ultimately end up paying, $1798 per month at 6%, rather than $1743 per month at 5.5% with $7,000 in closing cost added to the principle, over the next 5 years, thats $3480 more interest. over the life of the loan $20, 880 more interest. So the "No-Cost" Loan does not really exist. What we try to do is find the exact place where the borrower can achieve the best market rate available, with the minimal required closing cost to do so, thus saving the most money going forward, which is usually the objective of most borrowers to begin with. Our motto concerning closing cost is: Promise Good, But Deliver Better.