“How Much Does a NO Cost Mortgage Really Cost?”
No cost mortgages
Mortgage loan professional Joe Petrowsky provides some sound advice for prospective mortgage borrower that are seeking a "no cost" mortgage loan.
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“How Much Does a NO Cost Mortgage Really Cost?”
I know I’m not telling you anything that you don’t already know, there is no such thing as a free lunch and there is no such thing, as a NO closing cost mortgage. The only way this happens is the borrower/consumer pays a higher interest rate.
Normally the rate is higher from a ¼% to ½%. So let’s see what the math looks like. As an example, let’s use a $200,000 loan. The closing costs would be $2500 to $3,000. Let’s use 4.5% as a rate, when someone pays the closing costs and for 30 year, a payment would be $965.
Now let’s add 3/8% to the rate the payment now becomes $1013. The difference is about $48 and over 30 years that is $17,413 and over 10 years $5,789.
There is one more point, if someone plans on owning a property for less than 5 years, a no closing cost option might be a possibility, but I would rather see the client in an adjustable rate mortgage which will be about 3/4 of a percent lower interest rate. When we get this finite, I would have to make sure I understand what is in the best interest of the client.
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Joe Petrowsky, NMLS #6869
Right Trac Financial Group, Inc. NMLS #2709
110 Main St.
Manchester, Ct. 06042
Office: 860 647-7701 x116
Fax: 860 647-8940
Cell: 860 836-9294
Email: joe@righttracfg.com
Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.
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