What is the difference between a zero point and a no cost loan?
With a zero point loan, a borrower has opted not to pay points to buy their interest rate down but will still be paying for their base closing costs (i.e. appraisal, credit report, lender doc fees, title and escrow, etc.). With a no cost loan, a borrower has accepted a higher interest rate, (typically .375-.500% higher than on a zero point loan) with the trade off that the lender or broker will pay for all their non-recurring closing costs (all base closing fees except for interest, taxes and insurance due).
With a zero point loan, a borrower has opted not to pay points to buy their interest rate down but will still be paying for their base closing costs (i.e. appraisal, credit report, lender doc fees, title and escrow, etc.). With a no cost loan, a borrower has accepted a higher interest rate, (typically .25%-.375% higher than on a zero point loan) with the trade off that the lender or broker will pay for all their non-recurring closing costs (all base closing fees except for interest, taxes and insurance due).
