Question:

What do I have to know about no closing cost mortgage loans?

Answer:

The no closing cost mortgage loans have become pretty popular recently with all the ongoing advertisement. However, is it really possible to have a no closing costs loan?

Closing costs do exist. At the least, the lender needs to pay all the people involved with collecting and processing your loan and will not give up the loan origination fee that rightfully belongs to lender.

One of the ways lenders approach closing costs is listing them per item on the HUD-1 form that will have detailed every single fee applied to the loan. There will be a closing attorney to explain to you what exactly you are going to pay for.

Another way lenders deal with closing costs is to charge you a higher percentage and pay for loan processing from their pocket – this is where the no closing cost mortgage loan comes into play.

There are certainly pros and cons to taking the no closing cost option. You should ask your mortgage broker or lender to explain what applies best in your situation.

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