Credit and Loans

Many people want to know if there is really such a thing as getting a mortgage and paying no closing costs. The answer is both yes and no. Yes, you can get a mortgage and not pay a closing cost up front, but instead you will still have to pay it over time. So technically you’re not getting it at no cost, you are just choosing to pay for it gradually. Unfortunately there is a catch if you choose this option – you will have to pay a higher interest rate to compensate the lenders for not being able to collect the closing costs up front.

As I said previously, there are both some good and bad about a mortgage without any closing costs. It can be extremely beneficial to you if you are short on cash and just can’t afford to chunk a large amount of money down. Generally speaking, the more money you put down on the down payment the more you will save in the long run. So even though you don’t have enough to do both, put as much as you comfortably can on the down payment, then you can compare with your lender what your monthly payment will be on the mortgage for each option.

Something else you should look at when choosing to have no closing costs on your mortgage is how long you plan on living in your new home. Will you be there for a short period of time, or will you live there for a while? Unfortunately when not paying closing costs, it just doesn’t make sense to live there long term. If you plan on staying for more than five to eight years, you are going to continue paying the high interest rate long after the lenders made their money back from it. You could attempt to refinance after a few years, but with how low the interest rates currently are, you may not be able to find a better rate.

Typically, not paying closing costs on your mortgage will add about half a percentage point onto the interest rate you’re paying. So if you got a rate of 4.25 on a 30-year-fixed-rate mortgage, a zero-cost mortgage could have a rate of 4.75 percent. Depending on what the closing costs could have been otherwise, it could be a little more or less.

As mentioned before, different lenders will offer different options. Keep in mind that it’s possible you could still have to pay a small amount for the closing costs upfront, but still not as much as it would normally be. This means even on the zero-cost mortgage you could be required to pay for property taxes and home owner’s insurance separately. You should always ask different lenders what is covered as they all won’t give you the same answer, and it’s always a good idea to speak with a variety of lenders.

Evolve Bank & Trust located in the DFW area has the best rates on dallas mortgage loans. So come by soon and get loans dallas at the best possible price possible. Hurry before they expire!