No Closing Costs Home Loans

Buying a home is a big deal and homeowners often want to save money any way they can and this includes choosing a no closing costs home loan. There are various mortgage companies that offer these loans but it is important to do your homework first to ensure that you are really getting a good deal. Beware of companies that refuse to provide you with upfront information or won’t explicitly state what fees you will need to pay. It’s important to understand that a no closing cost home loan doesn’t guarantee that you won’t be required to pay any money at the close of the loan as you will still be required to pay specific charges.

When choosing a loan or mortgage ask the lender to provide you with a good faith estimate. Federal law dictates that lenders must provide you with a “good faith estimate” within at least three days from filing your application with your lender. The estimate will detail an approximate or estimation of the fees associated with closing the loan. Make sure to perform your research and compare these fees with other applications from additional lenders to ensure that you find the best deal. Even with a no closing costs home loan expect to pay for insurance, title search, appraisal costs and even credit checks. Realize that the figure you receive from your lender is not an exact figure and is subject to change depending upon your loan specifications before closing.

The title search is an important aspect of buying a home as it determines that the person selling the home or property has the legal right to do so. Title searches can be in-depth and require a great deal of man power to accomplish. You will be charged for the title search and there is no set price for this service. Each lender charges a different fee.

Another fee you’ll need to pay is title insurance. Title insurance is required to protect the lender from any problems that may arise due to a faulty title search. The title insurance is required to keep the lender’s investments protected if there is an issue with the title or ownership of the home or property being bought. Speak to the lender about steps you can take to reduce the amount of the title insurance cost. Sometimes if you work with the title company used by the original owner, you can negotiate a “re issue” rate which results in a lower premium since you won’t be getting a new policy. Like the fees for title searches, title insurance fees vary by loan amount, worth of the home and location.

Beware of lenders that draw you in with the promise of a no closing costs home loan then make up the difference with higher interest rates. When choosing a mortgage you need to consider the three factors that determine how much you will pay: interest rates, points and fees. It’s often best to compare your interest rates, points and fees and determine which will save you the most money in the long term. Always calculate different options and compare various loans. Keep in mind that you can negotiate and if you have good or above average credit chances of lowering your cost is great.

It’s a good idea to get information in writing, especially if your lender is requesting a non-refundable fee. Always ask your lender regarding any questions you have and if you feel you can’t trust the lender completely, then take the application to your local resources such as those with your state’s HUD office (U.S. Department of Housing and Urban Development). They often provide free counseling to those purchasing a home to ensure that they are full prepared for the commitment they need to make. If you need the advice of an expert whom you can trust, contact your local HUD office as they will help you understand the basics of purchasing a home and can assist you with choosing a loan.