Who pays the closing costs for zero point and no cost mortgage?


There are many different fees in the closing costs associated with closing on a real estate purchase. If you are getting a no cost mortgage, non-recurring fees will be covered by the lender in exchange for somewhat higher interest rate (up to .500%). If you are not buying points, you will have to pay all closing costs a buyer is entitled to pay.

Those can include and are not limited to

  • appraisal,
  • credit report,
  • title examination,
  • loan origination fee,
  • prepaid insurance premium (in case borrowing more than 80% of appraised value), etc.

Either way, taking a no cost or a zero point mortgage, the buyer is paying the closing costs. However, with a no cost mortgage this is a little less obvious, since it will take time before you actually pay them within the monthly installments. If you refinance before or at the time you break even, it will be a good deal.

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