The first thing to keep in mind about no closing cost mortgages loans is that these don’t mean you won’t be responsible for paying any fees at closing time. What it does mean, however, is that many of the lender’s fees often associated with buying or refinancing a home will be replaced by higher interest rates or added on to the loan. There are still fees associated with home purchase and refinancing that you will be expected to pay. Some of the fees that you will be expected to pay fees for a title search, title insurance, credit check and other fees as well. Because these loans have lower fees than others, they are often sought after and make a good choice.
If you’re interested in no closing cost mortgages loans, then ask the lender to provide you with a good faith estimate which will give you a general expectation of the fees you will be expected to pay. Always ask the lender to provide you with this estimate. It’s important to realize that many lenders who offer no closing cost mortgages loans plan on making up the difference by charging you a higher interest rate. There is one important factor to consider when choosing whether no closing cost mortgages loans would be best for your personal needs and financial situation: How long you will keep the home.
Those who plan to keep their home for a long time may find that choosing a no closing cost mortgages loan may find that high interest rates over a long period of time will counteract the benefits of a lower closing cost. If you are going to sell your home shortly, then you’ll find that the higher interest rates, coupled with lower closing costs are a good deal. Some lenders may choose to add the closing costs to your balance which makes certain that you still pay the amount, but instead it is spread out over a period of time. As always, make sure to do your research first and compare various loans as this will help you determine which one will best meet your current as well as future financial needs.
If you are unsure which loan would be the best for you, you may find that it is beneficial to speak with a housing counselor. Your local HUD (Housing and Urban Development Department) has counseling agents that will meet with you for free and help you determine the best strategy for your financial situation. A housing counselor can offer you their expertise for free and many find that the advice is priceless; often saving thousands of dollars. First time homebuyers should always speak with a housing counselor and those who are considering refinancing will find that they can still benefit from the advice and expertise offered by housing experts.
After speaking with a housing counselor shop around for various lenders. You’ll find that the Federal Reserve Board offers many tips and resources that can help you know the best questions to ask various lenders as well as understand each offer’s terms and requirements. It’s a good idea not to take anything for granted when comparing different lenders, terms and offers. Always ask each individual lender how they define no closing cost mortgages loans as well as a good faith estimate regarding various fees and rates. No closing cost mortgages loans can be paid by either paying higher interest rates or by rolling over the closing costs into the loan. You should always ask the lender for a breakdown of two costs: One without closing and one with.
It’s important to understand that according to the Real Estate Settlement Procedures Act, anytime you ask for a good faith estimate, the lender by law must provide it. Obtain good faith estimates from the lenders you are considering obtaining no closing cost mortgages loans from and compare them so you may find the best loan for your needs.