No Closing Cost Mortgage

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If you have been in the market for a home mortgage over the past few years then you probably have seen one of the many no closing cost mortgage offers that a multitude of lenders have begun offering. You must take caution before getting too excited about such a mortgage product though because in reality these no closing cost mortgages are nothing but a swift attempt by certain lenders to get you in the door so that you can apply to their company instead of the competitions'. The lenders that have been offering these no closing cost mortgage products do in fact cover the closing costs of your mortgage loan but only after they typically raise your interest rate behind your back by what is often times a fraction of a point.

This may not seem like much, but after you do the calculations this rise in interest can easily offset the cost savings that you would be able to receive by not having to pay for your closing costs. This is a perfect example of lenders being open to almost any kind of marketing tactic that can boost their sales and overall business, and while these no closing cost home loans have been growing in popularity over the past several years I suspect that there is going to be a significant market backlash once borrowers find out what has really been going on.

Closing costs can be very expensive and in this economy it is no surprise that so many people have been following up with such no closing cost offers. Little do these people know that they are going to have to pay a bit more over the long-term by taking out of these no closing cost mortgages, and it is really despicable that lenders have been raising their borrowers interest rates slightly to "compensate" for the subsidization of their closing costs. While this hasn't been happening with all of the lenders that have been offering such mortgage loans, the vast majority of lenders that have been providing these no closing cost mortgages have had no problem becoming part of this problem, and with the economy where it is at now it is no surprise that lenders are going to almost any lengths to get people in the door.

If this practice continues then I'm sure there is going to be a major crackdown once the real truth hits the mainstream and the volume of such repercussions is going to be heard for a long time in my opinion. If you are looking to save money while getting a home mortgage it is highly recommended that you stay away from any kind of offer that promises to pay for your closing costs, as virtually all of these no closing cost home mortgage loans will not save you money over the long-term. Even a small increase in your interest rate can cost you tens of thousands of dollars over time, and you don't want to needlessly have to pay for such costs so use extreme caution when investigating these no closing cost mortgage loans.

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