Is there really such thing as getting a house loan with no closing amounts? That’s a abstract notion and hard to give a direct yes or no to. There is an option for paying no closing costs up front when purchasing a house, but the downfall is they are just going to up your prime interest rate and you will just be gradually paying for it. This does have its pros and cons, it just depends on your private incident. This article will tell you on what to look for when it comes to a no-cost mortgage.
So what are the pros and cons to not having closing costs? If you are tight on money and just don’t have the cash to throw that much money down at once it’s beneficial to be able to roll up the closing costs into the mortgage itself. Depending on the predicament, you may have to make the decision if you will be better off putting your money into a bigger down payment. Doing this can likely be a more economical way to go, but you should compare what your monthly payments would be for each option.
If you are planning on living in the house you are purchasing for a long amount of time, you may want to rethink a no-cost mortgage. It may benefit you in the short term, but even after you pay off the closing cost you will still be paying the high interest rate due to it which is just more money out of your pocket. Generally speaking, if you plan on living in the house less than five to eight years, then it won’t be as big of a deal. If you want to live there longer you can always attempt to refinance and get a better interest rate, but you may not be so lucky with how low already currently are.
Having a no-cost mortgage will typically add half a percentage point to your interest rate of the mortgage. This number could be a little lower or higher depending on what the closing cost on the house is. For example if you got a rate of 4.20 on a 30-year-fixed-rate mortgage, a no-cost mortgage could have a rate of 4.70 percent.
Different lenders will give you different options on what you can do when you decide to have a no-cost mortgage. Just to be safe and get the best possible deal for you individually, it’s always smart to talk with multiple lenders to see the different options you can choose from.