No Closing Cost Refinance Guide: Refinance Without Fees in 2025

If you’ve been Googling phrases like “no closing cost refinance” or “refinance with no closing costs”, you’re not alone. In 2025, homeowners are more fee-conscious than ever. With refinancing already a math-heavy decision, the idea of cutting out any upfront charges is a win. After all, who wouldn’t want a zero closing cost refinance or a no fee mortgage refinance?

But even if you are getting a no cost refinance, the devil is in the details and knowing the fees and the lender you're working with plays a big role in making sure you win. A no cost refinance doesn’t mean your lender magically absorbs all the expenses. Instead, it means those costs are either rolled into your new loan balance or traded for a slightly higher interest rate. Both approaches can make sense — the trick is knowing which one fits your situation. The question is also how much are those expenses because every lender charges different expenses. You can work with a lender that has closing costs of 2% or one that charges 5% for the same work because of their overhead (and their need for massive profits at your expense).

In this guide, we’ll unpack how a no closing cost mortgage refinance works, the pros and cons, scenarios where it saves money (and where it doesn’t), and how working with a mortgage broker like LendFriend can unlock the best low closing cost refinance options across multiple lenders.

What Is a No-Closing-Cost Refinance?

A no closing cost refinance mortgage is exactly what it sounds like: you refinance your home loan without paying fees upfront. Normally, refinancing carries costs ranging from 2% to 5% of the loan balance. On a $400,000 mortgage, that’s $8,000–$20,000 out of pocket (depending on who you work with).

Instead of writing a check at closing, you can structure a refinance with no closing costs in two ways:

1. Roll Costs Into the Loan Balance
   Example: If your refinance balance is $250,000 and closing costs are $7,500, you refinance into a $257,500 loan. Your monthly payment increases slightly, but your interest rate stays the same.

2. Take a Higher Interest Rate in Exchange for Waived Fees
   Lenders may offer a zero cost refinance if you accept a rate that’s, say, 0.25% higher. Your balance doesn’t increase, but you’ll pay more interest over time.

3. Take a Blended Approach
   Some borrowers choose to roll part of the costs into the loan while also taking a slightly higher rate. This middle-ground approach can reduce the increase in balance while still keeping upfront expenses low.

Both are true no fee refinance structures — and the blended option shows how they can be combined. Adding 0.25% on the rate to save $8,000–$10,000 is usually smart for borrowers because the extra monthly payment is significantly less than the upfront savings, and given that rates are still elevated in 2025, you’ll likely be able to refinance again before you sell or pay off the loan. Therefore, borrowers should seriously consider the higher-rate option, because for many it offers the best balance of short-term savings and flexibility.

What Do Closing Costs Usually Include?

To appreciate the appeal of a refi with no closing costs, it helps to know what you’re skipping:

• Origination fees: Often 0.5%–1% of the loan amount, these are lender-imposed charges for setting up the loan. At LendFriend, we don’t charge origination fees at all.

• Appraisal: $600–$2,000, depending on property size, required to establish the home’s market value for the new loan.

• Title fees and title insurance: Required because a refinance creates a new lien. This ensures the lender’s interest is protected and that the property title is clear. These typically run about 1% of the loan amount. Title costs are state regulated and cannot be adjusted no matter who you work with.

• Credit report fees: $150–$250, charged to pull your credit history and scores. These have become more expensive in recent years due to rising costs from the credit bureaus.

• Discount points: Optional fees paid upfront to lower your interest rate. Many lenders push these because it makes the math of refinance look better, locks you into the loan for longer if rates continue to fall, and makes you more likely to refinance again. At LendFriend we never push discount points on a refinance because we don’t believe in tricking the consumer. Learn more in our permanent buydown guide.

• Mortgage insurance premiums (MIP or PMI): For FHA or conventional borrowers who don’t have 20% equity, these protect the lender in case of default. They can add significant cost to your monthly payment. The good news is PMI isn’t permanent — once you reach 20% equity, you can often remove it. Learn more in our PMI guide.

• VA funding fee: Applies on VA refinances unless you’re exempt (such as veterans with a qualifying disability). It helps keep the VA loan program sustainable. Learn more in our VA disability guide.

• Administrative and processing fees: Many lenders tack on $1,000–$1,500 in admin fees or separate processing charges. At LendFriend, we'll never charge a processing fee.

When a No-Closing-Cost Refinance Makes Sense

A refinance mortgage with no closing costs isn’t always the cheapest option over the long haul. But there are scenarios where it’s a clear win:

• Short-term homeowners: If you plan to sell or refinance again within 5 years, rolling costs or taking a slightly higher rate usually saves more than paying $10,000 upfront.

• Cash flow priorities: A no fee refinance mortgage keeps cash in your pocket for renovations, emergencies, or investment opportunities.

• Cash-out refinance with no closing costs: If you’re already borrowing equity, rolling fees into the loan is often painless since you’re increasing your balance anyway. And it allows you to get more cash in your pocket, which is most cash-out refinancers’ goal.

• VA and FHA borrowers: VA IRRRLs (VA streamline refinances) and FHA Streamline programs often allow no closing cost refinance structures with reduced fees.

• Falling rate environments: If you expect to refinance again soon when rates drop, paying closing costs upfront is wasted money — by rolling the costs into a higher rate you start saving money on day 1 and the next refinance will make mathematical sense whenever you want.

Think of it this way: a free refinance mortgage is rarely “free,” but it can be a smart hedge if you value flexibility over absolute lowest lifetime cost.