Can I Really Get A NO-COST Loan?

Can I Really Get A NO-COST Loan?

People often ask if it is really possible to get a mortgage without paying closing costs. The answer is YES! We’ve been closing NO-COST loans for over 15 years and we will explain how.

A NO-COST Loan explained:

There are always fees associated with doing a mortgage. Appraisers, title companies and underwriters all require payment for their services. However, how fees are paid is your decision. For example, a typical loan will have:

· Basic closing costs (appraisal, title, underwriting)

· Either a cost or a credit for the interest rate you choose

Yes, you get to choose your rate. If you want a lower rate you will pay a fee. If you don’t want to pay any closing costs, you will get a slightly higher interest rate.

So, which option is best for you? This is where we will help advise you based on your specific circumstances. The following will demonstrate how a NO-COST loan compares to a FULL-COST Loan:

Option 1: NO-COST Loan

(Pay your fees with a higher rate)

$300,000 New Home Price

– $75,000 Down Payment

+ 0 Fees

$ 225,000 New Loan Amount

@ 4.625% Interest Rate

$1,156.81 Monthly P/I Payment

Option 2: FULL-COST Loan

(Add your fees to your loan amount)

$300,000 New Home Price

– $75,000 Down Payment

+ $4.712 Fees

$ 229,712 New Loan Amount

@ 4.25% Interest Rate

$1,130.04 Monthly P/I Payment

By increasing your monthly payment by $26.77 per month you avoided paying $4,712 in upfront closing costs. You can see that it would take almost 14 years ($4712/$26.77=176 months) to break even paying your costs. Meaning, you would have to keep your home, and this exact loan (no refinancing), for over 14 years to benefit from paying closing costs. Most homeowners only keep their loan for an average of less than seven years. This is why for many people we suggest a NOCOST loan.

 

To determine which option would save you the most money, call us at 801-501-7950, or e-mail me at mike@dev.citycreekmortgage.com. You can also use the “Find Your Best Rate” tool on our web site atwww.dev.citycreekmortgage.com.

(NOTE: City Creek mortgage is paid a flat fee by our investors, which means that we do not benefit from your choice either way. Our advice will always be based on what is best for you.) To determine which option would save you the most money, call us at 801-501-7950, or e-mail me at mike@dev.citycreekmortgage.com. You can also use the “Find Your Best Rate” tool on our web site at www.dev.citycreekmortgage.com.