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Posted on November 30, 1999 by Joy Stoyle | Posted under Mortgage Refinance
No Closing Cost Mortgage
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Often a mortgage lender will advertise a no closing cost mortgage to bring in potential borrowers. You should keep this fact in mind, because it means that the mortgage lender wants your business. They are trying to get you to come to them, so you shouldn't look at applying for a loan like you are asking them to do you a favor. They may have gotten you in with the promise of a no closing cost mortgage loan, but you need to go in there with the attitude that they need to be honest with you. The fact is that a no closing cost mortgage loan usually means that you will pay more in the long run. You may not have to pay up front, but the mortgage company will usually make up for this by charging you higher interest rates. During a time that interest rates are low anyway, this may be okay. For example, if you could qualify for a normal mortgage loan with the regular closing costs and the interest over the life of the loan would be 4%, then that is very attractive deal. If a mortgage lender is trying to get your business and advertises no closing costs, it could mean that the interest would be 5% instead of 4%. Since this is still an attractive interest rate, it might be okay to take the deal if avoiding some up-front fees could help you. Under the right circumstances a no closing cost mortgage could help you get into a house when you might not otherwise be able to. To get the lowest interest rate possible then ideally you want the normal type of loan with closing costs, but it depends on your circumstances. Keep in mind that you could apply for a loan with no closing costs, then a few years down the road, if interest rates look good, you could refinance at a lower rate. About The Author: |
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