no fee mortgage refinance: key pitfalls and smart steps

What “no fee” often means

In many offers, the lender uses a higher rate to generate a credit covering title, appraisal, and underwriting. You may still fund taxes and insurance prepaids. Some programs exclude state transfer taxes, condo questionnaires, or subordination fees, so confirm every line on the Loan Estimate and Closing Disclosure.

How to evaluate the offer

Compare by rate, APR, and total cash to close. With no fees to recoup, focus on the rate gap versus your current loan and your time horizon. Keep the term aligned with remaining years. If offered points or credits, ask for the par rate and a written credit schedule.

Common mistakes to avoid

• Chasing the lowest payment without checking total interest and rate markup.
• Ignoring escrow and prepaid items that raise cash needed at close.
• Skipping a written Lender Credit on the disclosures.
• Resetting a 30-year clock; match remaining term or choose shorter.

Request competing quotes the same day with identical lock length and loan type, then line up rate, lender credit, and APR. A true no-cost deal shows minimal cash to close and clear fee payers; if the rate seems high, ask for par.