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Palm Coast Real Estate: No cost Loans
By admin | August 7, 2008
Question: I want to know are there really no-cost or no-fee loans?
Answer: No.
Some lenders do promote what they call “no-cost” loans, but banking regulators are increasingly cracking down on these misrepresentations.
In reality “no-fee” loans may acould actually cost you more over the long term of the loan because the costs of the “no cost loans” are generally rolled into the new loan through higher interest or larger principal.
A common occurrence of a “no-fee” loan is one where the points charged and all fees are included in the loan principal.
This means that you the borrower does not pay these expenses at the close of escrow. Instead they are rolled into the loan and you end up paying for them over the life of the loan, which ends up costing you a lot more.
This type of loan has been called a “no-fee” or “no cost” loan in order to sell it, as the borrower is not charged any fees up front. But the borrower ends up paying a lot more in the long run as they end up paying for these “no fee” costs every year of the mortgage.
Topics: Real Estate Questions |
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