The opposite of a no-closing cost refinance loan is one where the borrower pays extra at closing to buy down, or get a lower mortgage interest rate.  This can be a very smart financial move if the homeowner plans on staying with their new refinance loan for more than five years.  Any less than five years and it may end up costing more to buy the discount points than the benefit of lower monthly payments by reducing the interest rate.

 

An important consideration when buying discount points is the amount that will be tacked on to the refinance closing costs, and whether this amount can be rolled into the loan amount, instead of being paid out of pocket at closing.  Depending upon the total loan amount, buying discount points can actually save a homeowner tens of thousands of dollars over the term of the mortgage loan.

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