What is the difference between a no closing cost loan and the interest rate?

Hey Thom... I think you confusing loan products.. When referring to refinancing, most lenders will shout how they do "No Cost" loans. This is a play in words... Lenders don't work for free, title companies, attorneys, appraisers, ect... none of these services are done at no cost.. So who pays or it.. With a refinance, you pay for it in your interest rate.. The lender raises the rate to increase the amount of rebate that is paid. This rebate is then used to pay the costs.. So if you pay upfront, or if you pay via a higher rate, it's still you paying.. When it comes to a new home purchase, then the same applies, however you can ask the seller to participate via seller concessions that can assist in paying some, if not all of the costs.. The best advice I can give you is to contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com

One of the most confusing areas for consumers in a mortgage loan transaction are closing costs. There are advantages and disadvantages of the highly advertised "no closing cost" loans. First and foremost, there is no such thing as a zero cost loan! Everyone knows there are costs associated with getting a mortgage loan; appraisal, credit reports, state taxes, county recording fees, title companies fees, lender fees, escrows, and more. Someone has to pay these fees, and it is always YOU. How you pay them is you need to understand. In a no lender fee or no closing cost mortgage loan, the lender simply uses "negative" points to offset your costs. For example by having maybe a 4.75% rate versus a 4% rate, you can reduce (or offset through interest rate) most, if not all of your closing By choosing this option, it appear as if you saved thousands in closing costs. GREAT! But while lower costs always sounds good, you now have a significantly higher interest rate! OK, now what? No matter what anyone says, a zero cost, or no lender fee loan is NOT automatically a great deal. Although it may sound so much better than paying thousands in closing fees, you have to analyze each individual loan and client situation to determine the benefits. Many lenders speak highly of the "thousands of dollars" you save in fees. They never discuss the fact that you may spend significantly more in interest over the full life of the loan than you ever saved in up-front closing costs! There is a break even point... Generally speaking, if you are in the home under 5-years, a low or no closing cost can be a good deal. On the other hand, being in the loan more than 7-years generally means the no closing cost loan actually costs you a lot of excess interest. Talk to a local licensed (not a bank) mortgage professional and have them run the numbers on both options to see what makes most sense for you!

No body works for free. The closing cost is roll into the higher interest rate. The interest rate will depend on the loan amount. Usually most no-closing cost loan only cover for non-recurring cost like escrow, title, notary, appraisal, underwriting, government recording. The cost that you have to pay are -home insurance-property tax-HOA dues (if you have HOA)-daily interest between the old Lender and the new Lender

YES, a no closing cost loan sounds good, but the rate will be higher, its for people who do not plan to be in the house very long, and it is used as a marketing technique to get the phone to ring.. Also, it all depends on your loan size, credit, assets, and how strong a borrower you are.. the fees for closing costs are very regulated , and we as loan professionals, do not and can not make money on the costs, its a pass thru fees.. email me at yourloanpartnerforlife@live.com i have over 25 years in this industry..

One way or the other, you will pay. You'll either have a higher interest rate with no up front costs, or you can obtain a lower rate with the up front costs. In addition, since you're buying you will likely be able to find a seller that is willing to pay these costs for you as it is extremely common in today's market. If you choose the "no closing cost" option, you will have a higher payment over the full term of the loan and more than likely pay more in the long run unless you intend to sell the home very soon after buying it. As previously advised by others, contact a local mortgage broker...someone you can sit down with face to face and will actually take the time to go over the advantages and disadvantages of both options.

The term is misguided there are costs and you pay for them either in cash or for a higher interest rate.