A no-closing-cost refinance means the lender covers the costs with a credit, funded by you accepting a slightly higher rate. The costs never vanish; they get paid a different way. Every rate has a price. Take a rate a notch above the lowest available and the lender earns a rebate on that higher rate, and that rebate pays your closing costs. So the real trade is rate versus cash: - Lowest available rate: you pay the closing costs out of pocket. - Slightly higher rate: the built-in credit covers some or all of the costs, and the refinance costs you nothing up front beyond the ordinary interest you would owe either way. Illustratively, you might close on a home at one rate, then a short time later refinance into a lower rate where the credit available at that new rate covers all the closing costs. You improved the rate and paid nothing up front to do it. Whether that structure is right depends on how long you keep the loan. If another refinance is plausible before too long, taking the free version and skipping the sunk costs can make good sense, which is the kind of thing we would map out with your actual numbers.