Mortgage Refinance Loans –No Closing Cost or Pre Payment Penalty

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Mortgage Refinance Loans
Understanding No Cost Refinance and Prepayment Penalty Options

In a perfect lending world, all borrowers would qualify for a no closing cost mortgage refinance that did not have a pre-payment penalty either. Getting a no cost refinance loan is possible but you will have to have good credit scores and be able to provide the lender with income documentation. Qualifying for refinance mortgage that has no pre-payment penalty is very conceivable. All FHA and VA home loans have no penalties for early pay-off. Today, most conventional home mortgages have the option to have no pre-pay penalties and the option for a no closing cost refinance if you are willing to lock in at a higher interest rate.

The Truth in Lending Act (TILA) is a United States federal law designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement, including information about any variable rate feature, and all costs, including the annual percentage rate (APR). The APR reflects the effective yield on a loan including origination fees and discount points. All this is expressed on the truth in lending (TIL) disclosure, which is administered by the Federal Reserve.

Among the things disclosed in the TIL, is whether or not there is a prepayment penalty. With a home equity line of credit (HELOC), it will disclose key terms of the plan, including information about variable rate features, all costs and whether there is an early termination fee.

For a mortgage refinance or home equity installment loan (HEIL), you'll find the prepayment disclosure near the bottom of the form, which reads as:

[ ] may [ ] will not have to pay a penalty

Although the use of the word "may" falsely suggests that there may not be a penalty, if the box next to "may" is checked it means you WILL have a prepayment penalty. A similar disclosure about an early termination fee will be found on a HELOC truth in lending disclosure, probably also near the bottom of the form.

What are prepayment penalties and early termination fees?
According to Freddie Mac, a mortgage with a prepayment penalty option requires you to pay a penalty or fee if all or most of loan amount is repaid within a certain time period (may be a 1 year, 2 year or 3 year period of time). Prepayment penalties are usually expressed as a percentage of the outstanding balance (e.g., 1% or 2%) or as a specified number of months--typically 6 months of interest if paid off early.

A 3 year prepayment penalty common is with fixed rate mortgages. Early termination fees with home equity lines of credit are also common. Today more than 60 percent of lenders have early-termination fees vs. around 45 percent in 2000, according to HSH Associates. Early termination fees are similar to prepayment penalties in the respect that you pay a fee if you pay off and close the line within a specified period, typically three years. These fees could amount to the closing costs that the lender waived when you opened the line.


	Additional Home Equity Options from Smart Home Equity
	Home Equity Loans Smart equity loans offer money for home remodeling and debt consolidation.	Second Mortgage Refinance Eliminate interest only and adjustable rates on your HELOC.
	Home Equity Loan Refinance If you have a line of credit or a 2nd mortgage with a variable interest rate, now is the time to refinance.	Debt Consolidation Loans Consolidate high interest bills and lower your payments for increased monthly savings!

Fixed Payment Home Equity Loans
Utilize your home equity! Sub-Prime Equity Loans No Doc Home Equity Loans	Most homeowners are getting wise to adjustable rates, but if you have put off consolidating your credit cards or variable line of credit, take a minute and discuss a fixed payment home equity loan that could save you quite a bit of cash over the years. Cash Back Equity Loans 100% Home Equity Loans
Home Improvement Loans
Finance Home Remodels Pool Construction Loans	Homeowners should stop using their credit cards to finance home improvements because the interest rates for fixed rate home equity loans are much lower & they will be able to borrow more to get their projects done right the 1st time.

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