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Five Star Mortgage, LLC
2280 Satellite Blvd.
Duluth, GA 30097
OFFICE 770.495.3516
FAX 770.495.3528
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No Closing Cost Loans.
No Closing Cost Loans have become popular recently and may be utilized for either the purchase of a home or when refinancing. There is not a magic wand that is waved and the closing costs disappear, with this mortgage the lender pays the closing costs in the transaction. The lender is able to do this by charging a higher interest rate for the loan and then uses what is called the yield spread premium (money paid to the lender by the investor for selling the loan at a higher rate) to pay the closing costs.
In order to compare and evaluate if a No Closing Cost Loan is right for you a few calculations need to be done. First, examine the difference in payments between the higher rate and the lower rate. Secondly, what is the amount of closing cost to be paid? Finally, divide the amount of closing cost by the difference in payment amount. This number is the break even point, or better stated, how many months it takes to break even.
In many situations it is advantageous to use a No Closing Cost Loan. Should you know that you will only be in the home you are purchasing or refinancing for a short period of time, say less than 3 to 5 years; this may very well be a viable option to pursue. In order to determine if a No Closing Cost Loan is right for you, it is best to meet with one of our loan officers and discuss your goal.
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