Posted on: 04th Jan, 2009 06:04 pm
That is a question that I hear a lot and I see people asking that on various forums and blogs.
If anyone out there is looking for a no closing cost loan, you should know there ARE costs associated with closing your loan. The real questions to ask yourself are...
1. How are you paying those costs?
2. Do you even know that you are paying those costs?
There are costs that you cannot avoid because they are generated and/or regulated by your state and local government. They are recording fees, title insurance, and a few others. A list of typical items you will see at closing can be found here "http://www.dreamhomefinancing.com". Since some of those fees are essentially mandatory, then who is paying for them?
The borrower is truly responsible for paying those fees. Typically you will see them itemized on the HUD statement. However, if a lender tells you that those fees will not exist if you fund the loan with them then you have to ask yourself how? You are probably getting a rate that is higher in exchange for your lender/broker absorbing those fees. That may be ok if you plan to keep your loan for a year. However, if you are going to keep the loan for more than a couple of years, you will probably pay more in interest (lowest rate vs rate with no closing costs) than what you would have paid in fees at closing.
Something else to watch out for is the definition of "closing costs". Regardless as to who you work with on your next loan, be sure to get a Good Faith Estimate and read it carefully.
All first time home buyers should educate themselves in all areas of real estate and mortgages before signing on the dotted line. There is a lot of information available here on mortgagefit, or you can visit the FAQ section of "http://www.dreamhomefinancing.com"
Best of luck !!
Eric
Dream Home Financing LLC
If anyone out there is looking for a no closing cost loan, you should know there ARE costs associated with closing your loan. The real questions to ask yourself are...
1. How are you paying those costs?
2. Do you even know that you are paying those costs?
There are costs that you cannot avoid because they are generated and/or regulated by your state and local government. They are recording fees, title insurance, and a few others. A list of typical items you will see at closing can be found here "http://www.dreamhomefinancing.com". Since some of those fees are essentially mandatory, then who is paying for them?
The borrower is truly responsible for paying those fees. Typically you will see them itemized on the HUD statement. However, if a lender tells you that those fees will not exist if you fund the loan with them then you have to ask yourself how? You are probably getting a rate that is higher in exchange for your lender/broker absorbing those fees. That may be ok if you plan to keep your loan for a year. However, if you are going to keep the loan for more than a couple of years, you will probably pay more in interest (lowest rate vs rate with no closing costs) than what you would have paid in fees at closing.
Something else to watch out for is the definition of "closing costs". Regardless as to who you work with on your next loan, be sure to get a Good Faith Estimate and read it carefully.
All first time home buyers should educate themselves in all areas of real estate and mortgages before signing on the dotted line. There is a lot of information available here on mortgagefit, or you can visit the FAQ section of "http://www.dreamhomefinancing.com"
Best of luck !!
Eric
Dream Home Financing LLC
Hi eric,
Yes, a lot of people ask about closing costs in the forums. You have discussed an important topic. Thanks for sharing your thoughts with the community. I agree with you that it is important that home buyers should educate themselves about real estate and mortgage before they apply for one.
Yes, a lot of people ask about closing costs in the forums. You have discussed an important topic. Thanks for sharing your thoughts with the community. I agree with you that it is important that home buyers should educate themselves about real estate and mortgage before they apply for one.