A lot of mortgage brokers are advertising “no cost” loans. “No appraisal fee! No taxes! No title fees! We’ll pay all of your fees for you!”
It sounds too good to be true! No fees? Fees are bad! Boo fees! Who wants fees, when there are free loans out there?
Of course, it is too good to be true. Those costs – appraisal, taxes, title – aren’t free. They all have to be paid somehow. How do you end up paying them with a “no cost” loan?
How much no cost loans really cost:
You pay a higher interest rate. You still pay the costs of the loan, just spread out over time. In the long run, the “no cost” loan might cost you more than the full cost loan!
At Stewardship, I always give customers both options: would you like to pay this fee up front, or would you like to have the lender raise your interest rate to cover the fee? Even if you prefer to have your fees covered by a higher interest rate, at least you do so knowing the lowest rate you qualify for.
The best way to save money on a loan isn’t to hunt around for “no cost” gimmicks. It’s to prepare your finances in advance. I wish that so many of the people I help with mortgages would have met with me a year earlier, before they were ready to buy a house! I could have given them a few simple steps to follow, allowing the banks to see they are better borrowers and offer them better loan terms.
Stewardship Financial can help you put your finances in order now, so that a mortgage really does cost you less (in interest) when you need one in a year or two.