Zero fee mortgages, how do they work?
The bank doesn’t do anything for free. I want to know why you would choose a no fee loan over a traditional.
Tags: Mortgages, They, Work, ZeroThe bank doesn’t do anything for free. I want to know why you would choose a no fee loan over a traditional.
Tags: Mortgages, They, Work, Zero
The true name should be zero money needed at closing. Do you REALLY think that a bank that charges you for ATM transactions will eat the cost of closing your loan? The appraiser, title company, county recorder dont work for the bank. What bank stays in business by giving away money? Aren’t there certain accounts that CHARGE you YOUR money based on the amount you keep?
The place to see what you paid for is line 803. The yield spread premium is what you PAID to NOT recieve the lowest rate!
You’re absolutely right. Banks do nothing for free.
Any time you have a reduction in fees from your lender, they must compensate themselves through a higher interest rate.
Usually, in my opinion, it makes the most sense to pay the actual costs associated with the loan directly, and take the lowest rate possible. However, much depends on how long you’ll be in that home, or even in that loan. Anything less than 3 years, it might make sense to take the higher rate and lower fees, as the higher rate will cost far more over 30 years, but less in the early years.
The only way to compare is to take a look at what rates you are offered, and what fees you are saving. If you save $1000 in fees, but pay another $20/month in interest, it will take you 50 months before your higher rate actually costs you more. So, if you’re out of that home or loan within that time frame, you saved money. If you’re in that same loan 8 years from now, you’ve now lost $920 in higher interest payments.
A good loan officer should be happy to present your options both ways (clearly showing the break-even periods required), and make recommendations based on your best estimate of how long you’ll be in that home or in that loan.
There really is no such thing. They dont give you the cheapest interest rate that you qualify for. So either way you are still paying for it, just nothing is comming out of your pocket at the time.
All of this is true but one thing. Line 803 does not exist for more banks only brokers!!!!! YSP or Deferred premium does not have to be disclosed by banks or true lenders! If there is no fees associated with your loan go to the truth in lending or the truth in confusing, it will show you the cost of your loan if your rate is 6.00% and your APR is 6.45% you are paying the closing costs not the bank. For real answers all the time ask me then verify it. You can post your questions at http://mortgagism.blogspot.com it`s new but I will answer questions for consumers and industry professionals!