Is a Mortgage With No Closing Costs Right For You? #homeownership #realestate #finances

Source:  Yahoo Finance

A mortgage isn't free - there are fees associated with getting the loan.  Those closing costs usually total thousands of dollars.  Besides writing a check to pay those fees at the closing table, there's another way to pay them when you refinance your mortgage:  by adding them to the loan amount.  The result is called a no-closing-cost refinance.  Many lenders offer them.  However, you'll probably have to accept a higher interest rate over the life of the loan.

Making Sense of the Story:

- No-closing-cost mortgages are attractive to borrowers who don't have the cash to pay fees upfront.  Waiving the closing costs may be the ticket to getting a mortgage for a new home or a refinance.

- If you don't plan to stay in your home for more than five years, a no-closing-cost mortgage also makes sense.  With a traditional mortgage, it could take more than five years to recoup the closing costs.

-  The slightly higher mortgage rate associated with a no-closing-cost mortgage is still likely to be less expensive over five years than what you would pay upfront in closing costs.

- Paying a slightly higher interest rate to forgo closing costs may also make sense if you need the cash to do renovations on your home.

- If you plan to stay in your home more than five years, then a no-closing-cost loan likely will end up costing you more than a loan with closing costs.  That's true whether you're taking out a mortgage for a new purchase or refinancing an existing loan.

- Typically, you'll break even on your closing costs in a few years.  Going with a no-closing-cost loan saddles you with a higher interest rate over the rest of the loan.  That could end up costing you a lot more than the upfront fees if you keep the mortgage for a long time.

Check out the full story here:
https://finance.yahoo.com/news/mortgage-no-closing-costs-100000844.html

---