There really is no such thing as a no-cost mortgage loan. There are always costs – appraisal fees, title insurance, recording fees, and more – even on a loan advertised as “no-cost.” What that phrase usually means is that the lender is covering those closing costs in exchange for a slightly higher interest rate.
How the trade-off works
On a true no-cost thirty-year fixed-rate mortgage, the lender pays your closing costs, and in return you accept a rate a bit higher than you’d get if you paid those costs yourself. The math only favors you if you don’t plan to keep the loan – and the home – long enough to make paying points and closing costs upfront worthwhile.
When it makes sense
Buyers who plan to sell or refinance within a few years, or who’d rather keep more cash available at closing for furnishing a second home, often find the no-cost structure appealing. Buyers planning to stay long-term usually save more over time by paying closing costs upfront in exchange for the lowest available rate.
Not sure which structure fits your plans? Call Dockside Realty at 850.225.9785 or email christine@docksiderealtyinc.com and we can connect you with a trusted local lender.