No Closing Cost Mortgage - Is It Really Better?
63No closing cost mortgages are nothing new. A lot of financing companies are already advertising mortgage loans with no closing costs. Closing costs are the costs involved in finalizing the sale of a property. These costs are over and on top of the selling price of the property. Closing costs include attorney’s fees, brokerage commissions, documentary stamps taxes, title service fees, mortgage application fees, home warranties, property taxes, homeowners’ fees, and other fees. The long list of these payable could amount to thousands of dollars in closing fees. No closing cost mortgage loans do not have these additional costs to be paid upon closing the deal with the seller of the property.
You can avoid paying about $2,000 to $3,000 in closing fees when you take out a no closing cost mortgage loan. This is because these costs are actually added on to your regular monthly mortgage repayments. You can expect to have interest rates that bring your monthly mortgage repayment up by about $100 to $300. All in all, you might find that you will have to pay more in these monthly repayments than if you had paid your closing costs. The only time when no closing cost mortgages are beneficial is when the additional interest rates that are charged on your mortgage is insignificant. About .125% additional interest as compared to a regular mortgage loan interest would be good enough to make the no closing cost option more appealing.
You have to consult your mortgage broker for more information about the benefits and disadvantages of mortgages without closing costs. You can also gather information on your own by doing an internet search. Websites like www.refiadvisor.com, www.banklady.com, and www.refinancetoolbox.com can give you more information about no closing cost mortgage loans and point you to the right direction as to where to take out your mortgage loans. There are some sites like www.loanpage.com where you can find online closing cost calculators to give you an idea of how much additional fees you will have to pay and how much you can save by going for no closing cost mortgages. Some of these institutions offering mortgages with no closing costs include Countrywide Mortgage Services, Sun Trust Mortgage, and Ameriquest. Compare offers from these and other mortgage providers in your area. You have to keep in mind that the benefit should be yours and not the mortgage company’s. You should not be forced into foregoing closing costs when your computations show that you are better off paying the necessary closing costs and making lower monthly repayments.
There are resources that will tell you that mortgages with no closing costs are non-existent. This is precisely because of the way the costs are transferred or translated into additional interest rates. Some believe that the closing costs are simply channeled into another form of payment and the brokers and mortgage institutions are actually still making money out of the fees and charges included in the closing fees that have supposedly been taken out of the equation. Make sure that all is clear to you and that your mortgage broker is not hiding any information from you. A wise and informed decision is the only way by which you can truly benefit from this financing instrument.
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MikeNV Level 4 Commenter 2 years ago
It's just another way to hide fees in the loan itself. This can actually cost you much more over time. But for people who do not have the cash up front it may be their only option. But over time you'll usually pay more. Mortgage Brokers are very sneaky in how they hide fees in order to boost their own commissions.