The Truth About No Closing Costs

2007-03-08 10:33:40

( Business )



There are a lot of companies out there who promise no closing costs on your mortgage deal. This comes with the offer of lower interest rates and flexible payment terms. You might get confused when you get the actual breakdown because there are still a lot of fees attached to your mortgage application. The sad truth is there is no such thing as no closing costs when it comes to your mortgage. No closing costs basically mean that your mortgage broker has waived their lenders fee. However, all the other fees such as appraisal fees are still there.

You can ask your mortgage broker or lender for a good faith estimate on the costs that you need to pay. You have to be aware that the costs are just estimates and they can still change at a future date. However, by getting a quote or an estimate you have a general idea of the amount you need to pay.

Closing costs usually include your down payment. The down payment amount can be different from one lender to another. Some lenders may even allow full financing provided that you pay for insurance and you have an excellent credit rating.

Appraisal fees, tax service fees and other inspection fees are also included in your closing costs. Appraisal fees apply to the cost of obtaining an estimated value of the property where the mortgage broker will base the amount. Tax service fees are fees charged to the broker to verify that taxes have been paid. Other inspection fees can include pest inspection, plumbing and electrical inspection on your property.

So if your mortgage broker claims that there are no closing costs to your mortgage application, you may want to compare their quotation with another lender. Some brokers compensate the loss of the lenders fee by charging you more interest and other fees.


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