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Mortgage Refinancing - Home Mortgage Loan - There is No Such Thing as a No Fee Mortgage Loan Everyone has seen the ads including probably wondered how some mortgage lenders provide absolutely no fee mortgage loans while others cannot. Check in with reality including you’ll find there is not such creature as a no-fee mortgage loan. Mortgage lenders claiming to provide no-fee mortgages are misleading homeowners; here are several tips to help you avoid being taken advantage of with “no-fee” mortgage refinancing. Mortgage lenders often mislead homeowners with “no-fee” mortgages by referring to their own fees, including not third party charges. The lender may have a mortgage program without fees, but the fees they are talking regarding are usually junk fees including have nothing to do with your settlement charges. These offers are usually footnoted with tiny print that reads: “No Lender Fees, other fees could apply.” You might say to yourself, absolutely no fee mortgages that eliminate junk fees are a good thing; however, mortgage lenders make up for the lack of fees by inflating your mortgage interest rate. A true absolutely no cost mortgage will be 1 where you were not required to pay for anything. absolutely no appraisal, title insurance, credit checks, attorney fees, survey, or any pertaining to the dozen or so charges found on your settlement statement. There are a lot of third parties involved with the settlement of your mortgage including someone has to pay these people; 1 way or another it’s going to be you. Usually no-cost mortgages are such that the lender pays some of these charges in exchange for raising your interest rate. If you’re considering a absolutely no cost mortgage like the 1 Bank of America is currently offering, run the numbers first. Look at the sum of your closing costs, say $1,500 including divide the by the amount of your mortgage. Suppose you were borrowing $200,000: $1,500 / $200,000 = .0075 or .75 percent. the is almost the equivalent of paying 1 “discount point” to lower your interest rate by .25%. A “no fee mortgage” is similar to the lender paying the point for you which will raise your interest rate by .25%. You’ve agreed to pay a higher mortgage rate in exchange for not paying your closing costs. Is the actually a no-fee mortgage? Nope, it’s a higher cost that you’ll pay each including every month with a higher mortgage rate. There are absolutely no free lunches at the time it comes to your mortgage loan: you always pay 1 way or another. You might learn more regarding your mortgage options, including costly mistakes to avoid with a free video tutorial.
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