the information you have to be alerted of About No-Cost Home|house|household|housing|property|real estate Mortgages

by Marcy Jennings on February 1, 2012

Is it a myth that people can get away with not paying for closing costs on their mortgage? This is hard to say as you can get one and have no closing cost, but that doesn’t mean you won’t end up paying it. When lenders allow you to do this they will typically jack your interest up to make up for the fact they aren’t getting the closing cost upfront. So really you are just being loaned the cost and paying for it just as you would with a credit card.

There are both benefits and downfalls to getting a no-cost mortgage. The benefit is you are still able to purchase a house even if you are short on cash and unable to put a large amount of money down upfront. The downfall is you will of course end up paying more for the closing costs as you are now paying interest on it. If you do decide to not pay a closing cost I would recommend that you put as much money as you can for the down payment. You still won’t be putting as much money down as you would have had to if you did want to pay the closing cost, but it will slightly lower your monthly bill the more you put down.

Something else you should look at when choosing to have no closing costs on your mortgage is how long you aim on living in your new house. Will you be there for a short moment of time, or will you live there for a while? regrettably when not paying closing costs, it just doesn’t make sense to live there long term. If you plan on staying for more than five to eight years, you are going to advance paying the high annual percentage rate long after the lenders made their money back from it. You could attempt to refinance after a few years, but with how low the interest rates currently are, you may not be able to find a better ratio.

Having no closing cost on your mortgage will add about half a percent point onto the interest rate you’re paying on the mortgage. That means if you had a rate of 4.25 on a 30-year-fixed-rate mortgage, a no-cost mortgage could have a rate of 4.75 percent. This could be slightly more or less taking into account what the closing cost is.

As talked about before, alternate lenders will offer different solutions. Keep in mind that it’s possible you could still have to pay a small amount for the closing costs upfront, but still not as much as it would usually be. This means even on the zero-cost mortgage you could be required to pay for property taxes and home owner’s insurance separately. You should always ask different lenders what is covered as they all won’t give you the same reply, and it’s always a good concept to communicate with a multitude of lenders.

Evolve Bank & Trust located in the DFW area has the best rates on dallas mortgage loans. So come by today and get loans dallas at the best possible price possible. Hurry before they expire!

Leave a Comment

Previous post:

Next post: