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What Is A No-Cost Mortgage?

By Kevin Landis

Top answers to the question of what is a no-cost mortgage.

It comes as a surprise to some people that something such as a no-cost mortgage exists in today’s financial world. For many people, this idea seems far-fetched, since everything in the loan world comes with high associated costs. The fact of the matter is that there are no-cost mortgages out there. So what is a no-cost mortgage? It is a mortgage type that comes with no closing costs and comes without the lender fees normally attached to the process. This is something worth considering for those people who do not want to cut a big check for closing costs right when buying a home.

What is a no-cost mortgage and what does it mean to buyers?

A no-cost mortgage is basically a new offering from some of the lenders that are seeking to gain more market share in today’s real estate world. They want to get more customers, so they are offering loans with no costs. What people see with these types of loans is that they can provide a very real and immediate financial benefit. When signing the loan and supposedly getting the home, you would typically have to pay big costs to the lender. A no-cost mortgage takes away those up front costs.

How is this accomplished?

In some cases, a no-cost mortgage is possible because individuals are required to have inspections done for themselves. This means that they get to choose the inspector and they can save money on the process. In some cases, the lender is just waiving the closing cost fee altogether, which is a better deal for people who want to buy. These types of deals have long been rare in the mortgage market, but they are becoming more and more common lately.

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4. What Are Closing Costs For An Average Mortgage Rate?
5. How Do Closing Costs Impact My Mortgage Rate?