What are No Closing Cost Loans, What does it Mean and is it for Me?
There are a few loans that have no closing costs out of pocket. Sometimes lenders may not charge application fees and agree to pay the appraisal and title fees, but they may increase the interest rate in return. Lenders can also roll the costs into the amount of your loan. So, because you’re not paying costs up front, it’s called a “no closing cost” loan. While slightly increasing your mortgage might be acceptable to you, keep in mind that it’s not really a cost-free loan. Calculate the difference in the payments of the two loans and determine how much the difference is between the two. In most cases the cost of rolling your closing cost into your loan amount out weigh the benefits of paying your closing cost out of pocket. Check your GFE (good faith estimate) to compare the two loan scenarios.
