Are there really “No Cost” mortgage loans?
While some banks advertise that their loans are no cost to you, actual fixed costs which are roughly $2,000 are “buried” in the higher rate that you’re charged.
Fixed costs are those for the appraisal, lender underwriting fee, and title charges. These are part of EVERY loan regardless of the advertisement or bank. Very roughly, there’s a 5 to 6 year payback for these No Cost loans. The higher monthly mortgage payment will total these fixed costs in 5 or 6 years.
Why would you want a No Cost loan? If you’re short of cash at the closing, or if you’re planning on moving in less than 7 years, this loan would make sense. Otherwise you’re better off with the lower rate especially since rates are trending upwards.
For specific numbers for your own loan, call me at 847-441-4116 or email me at email@example.com.