No Closing Cost and No Fee Mortgages in Charlotte
Posted January 29, 2008
Have you heard that “No Fee” and “No Closing Cost” mortgage loans are available in the Charlotte area? Yes, and they are catching on in popularity, especially in the Jumbo mortgage loan market!
But before you jump onto the “NO COST MORTGAGE” bandwagon, you must know some hidden truths about these mortgage loans…
There is no such thing as a Free Mortgage. Just think about this for a second. If a closing requires the services of a qualified attorney, and title insurance is required by all lenders to ensure there are no “surprise liens”… how can a mortgage loan be free? When was the last time you heard of an attorney working for free, or an insurance plan not charging a premium?
Its all about marketing.
You see, there is no such thing as a true “no closing cost mortgage” or “no fee mortgage“. Everyone involved in the mortgage transaction will get paid. The difference is who pays for it.
In a “no closing cost” mortgage, the lender pays for the fees from their profits. Profits? What profits? It is a “no fee mortgage,” right? Well, not exactly. The lender will make additional profit by increasing the rate of the loan, and the additional profit they make there will pay for the fees. So it could cost you more over time with a “no fee mortgage”, plus you lose out on the tax write offs you get for any closing costs you pay related to a mortgage loan.
So if a no closing cost mortgage has a slightly higher fee, why is it so popular? Well, partly it is perception. But also, depending on the borrower, it may be a great option! There is no such thing as a bad mortgage loan, just not the right one for all occassions.
For example, a lot of borrowers with jumbo mortgage loans in Charlotte are using these programs. They don’t mind the rate being 1/8th to a 1/4 point higher if they are not adding more to the loan balance. And in many cases, even with the slightly higher rate, today’s jumbo mortgage rates are much lower than what majority of Charlotte home owners currently have!
Another example is when a client has neither the cash to bring to closing, nor the equity in the home to “roll” the closing costs in to the new mortgage loan. The borrower may save more money each month with a lower rate on a No Fee Mortgage plus save the cash needed to make it happen.
So why tell the hidden secrets? Why not just market a No Fee Mortgage in Charlotte to local home buyers and home owners? Because I beleive that every borrower should know what they are getting and understand why. False or misleading advertising leads to problems down the road, as witnessed over the past year. I for one am tired of seeing the big banks mislead people and want to make sure that MY CLIENTS KNOW WHAT THEY ARE DOING!
For a free consultation and to see if a No Fee or No Closing Cost Mortgage is right for you, call 704-651-8704 or apply online.
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