No Closing Cost Loans

You will have an interest rate that is slightly higher than the rate available for a mortgage loan where you pay closing costs, points, and fees.

A "No-closing cost" loan might be suitable if you plan on holding the mortgage note for a short time or if the difference in payment and rate between a "no-closing cost" loan and standard fee loan is minimal.

No closing cost loans are advertised as a mortgage loan with no cost to you. This is only true for the upfront cost. You will be paying those cost at a much higher interest rate which generally will cost you much more over time than if you would have just taken the lower rate with closing costs.

You may actually be able to effectively get a no closing cost loan, by getting the closing costs paid for by the seller, with seller paid concessions. If the seller agrees to pay 3% closing costs, you may get the same loan with a small increase in the loan amount, but no increase in the interest rate, providing the appraisal will allow for the increase in price. If you plan to hold on to the property for any length of time, it would be well worth it to raise the price by a few thousand dollars, instead of paying a higher interest rate.

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