No Closing Cost home loans are advertised to borrowers all the time. This may sound like a good deal. However, borrowers may want to investigate a little further because it could cost them thousands of dollars over the life of the loan.How long do you plan on living in your new house? If you expect your stay to be shorter term it is probably to your advantage to accept the higher interest rate in lieu numerous out of pocket closing costs.
A good mortgage consultant should be able to give you a long term analysis that will give you a break even point to let you know whether it would be best for you to pay the higher interest rate with no closing costs, or to pay the closing costs with a lower interest rate.
"No Closing Costs" certainly sounds attractive. However, most mortgage professionals can structure your mortgage so their is little or no money out of your pocket. If "no closing costs" is important to you, let your mortgae profesisonal know.
Generally, no closing cost loans come with a higher interest rate.
Lenders are often able to offer a rebate in exchange for a higher interest rate. With a no closing cost loan, this rebate can be used to absorb costs typically associated a new mortgage.
It is important to remember nothing is free. There are benefits for establishing your mortgage with a "No Closing Cost" loan. It will be important to review your options and goals with your mortgage professional to help determine if structuring your loan with or without closing costs is beneficial.
