What is a No Point – No Closing Cost loan?
Keep in mind the concept of discount points. By paying points, you can buy the rate down. Well, the reverse is true. If you decide on a loan with a rate higher than the base rate, we as the lender are paid the opposite of discount points – called Yield Spread Premium. We can use these funds to pay some or all of your closing costs. No one works for free, the slightly higher rate gives us the funds to pay the attorney, underwriter, title insurance and so on. Instead of paying for all the closing costs, with a rate between the full closing cost and no closing cost loan we can often do a reduced closing cost loan. This type of loan is not well known. With a no closing cost loan program, the borrower does not pay the costs typically associated with a loan closing such as lender’s title insurance, survey, attorney’s fees, appraisal, credit report, document preparation and underwriting fees. The borrower does not pay any points either. In addition, the borrower pays no application fee and no
