Nobody waives several thousand dollars in fees out of goodwill. The money moves somewhere else — and where it moves decides whether the offer is good or bad for you.
Short version: the costs are covered either by a higher interest rate or by adding them to your balance. The first is often reasonable if you will move soon. The second is just financing with extra steps.
The lender pays your closing costs in exchange for a higher rate — typically a quarter to a half point above what you would otherwise get. You bring no cash and you owe no more than before.
The higher rate applies for as long as you keep the loan. Over thirty years that costs far more than the fees would have. Over three years, it costs less.
Here your rate stays competitive but the fees are added to what you owe. Your balance goes up by several thousand dollars and you pay interest on that for the life of the loan.
This is not really a no-cost refinance. It is a normal refinance where you financed the closing costs, and it should be evaluated exactly that way.
Compare the new balance on the Loan Estimate against your current payoff amount. If it is higher, the costs were rolled in. If it matches and the rate is above par, you are getting a lender credit. Ask directly — the answer changes the math completely.
Run your own numbers
See the break-even month and what a refinance costs across the whole loan.
If this is your long-term home and you intend to keep the loan, paying costs up front and taking the lower rate almost always wins. The break-even between the two structures usually falls somewhere in the four to six year range — past that, the rate premium exceeds what the fees would have been.
Ask the same lender for two Loan Estimates: one with costs paid at closing, one structured as no-cost. Compare the rates and the cash required, then work out how many months of rate premium equal the fees you avoided.
If that number is longer than you plan to keep the loan, take the no-cost version. If it is shorter, pay the fees. It is the same break-even logic as the refinance decision itself, applied one level down.