<prompt> Human: So this is kind of a weird question and Im not sure where else to go with it. The short is in the title, a little bit more detailed information is below. I included probably a bit more information than needed because Im not sure whats relevant.My wife and I bought our house a little over 2 years ago. We went with a local bank had an 30 year 801010 mortgage 10 down, 10 HELOC, 80 mortgage. The mortgage is at a fixed 4.65 apr, the HELOC started at 0 for the first three months and then was transferred to a loan through the bank at a 4 fixed interest to be paid over 50 months. Were well ahead of schedule on paying the HELOC off and weve also thrown a few hundred extra at the mortgage, but thats peanuts. About three months ago a new mortgage company bought our mortgage and things have been going well. Today I had a missed call from a number I recognized to be there, I called back a bit later, gave them my name, and was transferred to someone else in the company. She told me they were calling with an offer to lower my interest rate. Now normally I just end it there but today I decided to listen to her spiel.Well the call was to offer us the opportunity to lower our current interest rate. She would need to run our credit and the numbers first, but if everything looked good she hoped to offer us something closer to 4. She further explained that this would still be a fixed rate and still for the exact same term the slightly less than 28 years left. They would cover the cost of the appraiser and closing cost to refinance. I flat out asked, whats the catch? and her explanation was that they were being proactive about customer retention rather than waiting for me to be dissatisfied and leave before they have the opportunity. While that does make sense in a way, I still very suspicious of any company in this day and age doing that kind of thing.Lastly and probably not relevant I remember my bank telling my that because I went with the 801010 my current APR 4.65 is about .5 higher than it would have been if we had 20 down. I also know my house has appraised at around 10 higher than what we purchased it for and that my town has consistent increases in housing prices.So I guess ultimately my question is, is this a normal practice? Is there some sort of catch that Im not seeing? Or did I luck out in having a decent company buy my mortgage. Im getting a call back tomorrow after they run my credit and doublecheck our debtincome ratio, and obviously I wont agree to anything without reading through everything well, but is there anything else I should be aware of?TL;DR: My mortgage company is offering to lower my interest rate at no cost to myself and keep every other detail exactly the same and I cant find the catch.  <response>: There arent really no cost refinancings, a bunch of costs go into a refinance, at a minimum you have to pay for an appraisal, title and county fees, settlement, and a few other things, which usually add up to a few thousand dollars. Then there is usually a brokers fee of 1 of the new loan value. Most refinancings cost around 2 of the new loan value.The 3 ways that lenders can get paid are 1 charge up-front fees in cash, 2 roll the fees into the new loan i.e. the new loan is slightly larger than the old one, or 3 charge you a higher-than-market interest rate.The lender is offering this only to make money, not out of a sense of altruism, so you can be sure theyre making money somehow. Most lenders do not keep the mortgages they write, they just turn around and sell them to Fannie and Freddie or some other warehouser. So theyre just interested in making the transaction with lower costs than they can sell the loan for.My guess in your situation is that your lender is offering you a new mortgage rate that is better than what you have, but not the best possible rate. For example if you shop around youll see that the rate on 30 year fixed mortgages is around 3.5. Your lender said they could offer you 4. So theyre profiting from the 0.5 difference in this rate and would probably gladly pay all of the other costs because theyll make money on the deal.As you probably imagine, you can shop around and if you have good credit and enough income you would probably have no problem refinancing with another bank at the actual market interest rate. You may have to pay some costs but this is likely going to be better for you in the long run.For example say you have a 250k mortgage at 4.65, your payment would be 1289. Say your lender offers a no cost refinance at 4, your new payment would be 1194, a savings of 95mo. Or you could go to another lender and refinance at 3.5 and your new payment would be 1123, savings of 166mo, but you would have to pay 5k in fees. It would take 2.5 years for your monthly savings to offset these fees, but then for the rest of the mortgage youd be saving money. Over the long term, getting the best possible rate is the best thing financially. 