Sara Routhier, Managing Editor and Outreach Director, has professional experience as an educator, SEO specialist, and content marketer. She has over five years of experience in the insurance industry. As a researcher, data nerd, writer, and editor she strives to curate educational, enlightening articles that provide you with the must-know facts and best-kept secrets within the overwhelming world o...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Aug 28, 2012

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In an effort to jumpstart the mortgage refinance market, many lenders have started to waive closing costs on refinances in exchange for offering slightly higher interest rates. Those waived fees in conjunction with record-breaking low interest rates have given way to a new trend called “serial refinancing.”

According to MarketWatch, between 2006 and 2008—which was the heart of the collapse—around 3.5 million homeowners refinanced at least twice. But those refinances often resulted in more expensive monthly mortgage payments for borrowers since closing costs and consumer confidence were both at all time highs.

As a result, 86 percent of borrowers who refinanced their home loan during the housing boom took out extra cash and wound up with a higher loan amount than they originally had, according to Freddie Mac.

But consumers aren’t taking out new financing at a loss anymore. With home equity being such a scarce commodity nowadays, consumers will only refinance if doing so leads to saving them money.

And that’s exactly what lenders are seeking to satisfy.

Freddie Mac reports the national average mortgage interest rates every Thursday, and over the past few months there have been more than 11 weeks of record-breaking interest rates.

But to further incentivize homeowners to apply, lenders are saying they’ll waive closing costs on home refinance loans in exchange for granting slightly higher interest rates on loans.

For an increase of a mere 0.25 percent, many homeowners are finding themselves scoring free refinance loans. Due to these “free” home loan refinances, some borrowers are finding themselves going back for more when rates drop as little as three-eighths of a percentage point, says MarketWatch.

“The traditional rules of refinancing are no longer in play,” Bruce Thielen, a vice president at NASB Financial, told MarketWatch.

Serial refinancing has proven to be an excellent money saving technique for homeowners, and it is bringing action to what’s been a very sluggish sector of the home mortgage market.