Talk to an approved housing counselor. The U.S. Housing and Urban Development Department sponsors housing counseling agencies around the country. The advice is free, or low-cost, and can help you save hundreds, if not thousands, of dollars on a mortgage refinance. The counselor will explain what programs and lenders to look out for, and can even help with negotiations.
Find a lender that offers no-closing-costs refinances. Start with your current one. Your lender might want to keep your business and offer to waive some of the refinance fees. Anyway, shop around to see what different lenders have to offer. The Federal Reserve Board publishes mortgage shopping worksheets that will help you to ask the right questions and compare the terms of each refinance.
Ask each lender what it means by "no closing costs" refinancing. According to the U.S Housing and Urban Development Department they usually mean no out-of-pocket expenses to the borrower. The costs are paid in two basic ways: by rolling the costs into the refinance loan, or by paying higher interest rates. Either way, ask for a break-down of the cost of refinancing with and without the "no-cost" option.
Ask each lender for a good faith estimate of the cost of refinancing. The Real Estate Settlement Procedures Act requires all lenders to provide a good faith estimate of all closing costs. Use the good faith estimate document to compare like with like when choosing a refinance.
Read the fine print of the no-cost refinance you choose; check that all the terms are as agreed. If you are in agreement, and are sure you can afford the monthly payments, sign it.
source : http://homeguides.sfgate.com/refinance-mortgage-closing-costs-2551.html