Refinancing a loan always includes certain administrative and processing costs which are paid when the loan paperwork is signed, known as closing costs. These costs are normally paid for with a separate check. Lenders who offer no out of pocket loan refinances, sometimes called no cost mortgages or zero down home loans if no home equity is required, fold the closing costs into the price of the loan. That way the overall amount of the refi loan covers both the outstanding loan on the property as well as the closing costs.
No closing costs loans can also be cash back mortgages. See other options for underwater and upside down mortgage relief.