No Points, No Fees Does Not Mean "FREE"!
O.K., I'm going to let out a little secret of the mortgage industry, because I think that we need to get everything on the table if we're going to trust each other. 
Here goes. (deep sigh) Mr. and Mrs. Borrower, you know that loan that you got from your friend's uncle's cousin? Well... he actually DID get paid! (heart pounding, shocking music plays)
No, but seriously, did you REALLY think he did the loan for free? Do you really believe that anyone works for free? I mean, even non-profits pay their staff!
This is a common misconception, and one that can cause conflict between mortgage originators and their clients, when the originator is competing against one of these so called "free" loans.
Here's the thing. When someone advertises a loan as "no points, no fees", that doesn't mean that they have decided to forgo eating and paying their own mortgage for the greater good of mankind : )
It simply means that they are being paid by means of a "rebate" from the lender, in return for giving you a higher interest rate. Essentially, you are financing your loan fees and they are included in your monthly mortgage payments to the lender.
Now, this is not to say that it's a scam or a rip off. This method is legitimate and can be used to honestly help borrowers who are short on cash, or those that don't care to pay all of the points and fees up front, out of their own pocket.
Many investors choose to do this, because they'd prefer to keep their cash for expenses such as repairs, remodeling or holding costs of the property.
As for traditional borrowers, if it's the only way that you can qualify for the loan, and it gets you the refinance or home that you wanted and/or needed, then it's a great alternative to use. So please don't think that your mortgage originator duped you, as there may have been no other way to close the deal.
If, however, you had the cash to close, and did not want to pay for those fees for 15 to 30 years by taking a higher interest rate, and this was not your understanding, then your mortgage originator may have some splaining to do, Lucy.
So remember, when something sounds too good to be true, it probably is and No Points, No Fees does not mean FREE!
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