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For this reason, many refinance gurus advise not to take out a no cost refinance unless you plan to pay it off within a few years, removing the sting of the higher interest rate. There are also several other good reasons to opt for a no cost refinance despite the interest rate. Perhaps you do not have the money to cover higher closing costs now, but you foresee improved income in the near future and want to take advantage of lower interest rates now. Or perhaps the higher interest rate offers tax advantages that offset the higher monthly payments. You may even find a no cost refinance that comes with an interest rate low enough to be competitive, especially if you foresee that interest rates will rise considerably before you have the cash on hand to do a traditional refinance.