As the name implies, a no-closing-cost refinancing is a refinance in which you do not have to pay closing fees when you obtain a new loan. However, just because there are no upfront expenses does not imply that your lender will foot the tab for you. A no-closing-cost refinance does not eliminate a borrower’s expenditures; instead, they transfer them to your principal or swap them for a higher interest rate. The most basic no-closing-cost refinancing adds the amount you would have paid at closing to your new mortgage. In other words, your lender adds your closing fees to your principal – the amount yet to be paid. This raises your monthly payments while not affecting your interest rate.