If you live in the Atlanta Metro or other big cities I am sure you have heard the guy talking about the no closing cost mortgage.  He calls it the biggest no brainer in the history of the universe. 

It goes something like... Don’t pay closing costs. Don’t give those pimps your money. We’ll close your loan for free, No Closing Costs! Then we’ll manage your loan for you. We’ll sit back, watch the market and the when the time is right, we’ll do it all over again. It’s the biggest no-brainer in the history of man!’

Well, he’s right. It is a no-brainer! It’s a no-brainer for many reasons, but let me point out a few of the biggest reasons why.

No-Brainer #1:

What bank, mortgage company, lender or broker do you know that works for free? I can’t think of one. You are paying for that loan somewhere.

It is usually in the form of a higher interest rate. Even though the ad says they don’t raise the rate, check it out. Get their GFE (notice I didn’t say their rate quote, get a valid Good Faith Estimate) and compare it to someone that is charging you closing costs.

There WILL be a rate difference of between 0.250% and 0.500%. That equates to a lot of money over the next 7-10 years, probably much more than you would have paid if you would have just rolled the closing costs into the refinance loan amount and got the lowest rate.

Think about it this way. If the closing cost equated to $4,500 but you take a no closing cost loan with a payment that is just $50 per month more and you stay in the home 10 years then you just paid $6,000 for your closing cost. Does that make any sense at all? Now imagine the payment is $100 per month higher, that’s $12,000 for closing costs that should have cost you $4,500.

No-Brainer #2:

If you are purchasing a home don’t do a No Closing Cost loan with any lender. There is no need to take a higher rate. In this buyers market most sellers are willing to pay your closing costs for you! Now that is the REAL No Closing Cost Loan.

No-Brainer #3:

Manage your mortgage for you? What kind of lunacy is this? Sure the mortgage is a financial tool, but its not a mutual fund or a stock portfolio. It is DEBT!

Who knows how to manage debt? Well, almost everybody with any since knows how to manage debt. If you think you don’t then here’s a true FREEBIE for you! I’m not going to charge you a dime for this little gem. Ready?…..

You manage debt by paying it off! And in this economy you pay it off as quickly as possible! You can’t get the return in the stock market equal to getting the lowest rate possible on all of your consolidated debt and then starting a 25, 20, 15 or (if you can handle it) a 10 year repayment schedule.

As I said, I can go on and on. The No Closing Cost loan is a huge no-brainer. For the lender it’s a huge no-brainer because they actually make MORE money off your loan because they can hide what they actually make in the loan. They never tell you how much money they are really making on your loan.

It should be a huge no-brainer to most of the public because it makes no financial sense at all. The only reason this type of loan exists is for those who plan to be in their home for 3-4 years at a maximum. For longer term stays you should look at low- and full-closing cost loans.

So don’t get tricked by fancy ads put out by slick operators. You don’t need a debt manager or a mortgage manager. Instinctively you already know what to do. Get the lowest rate with the lowest payment and then eliminate the debt as quickly as possible!

That’s the BIGGEST no-brainer in the history of the Universe!

Craig Bland is a trusted Mortgage Adviser with over five years of experience.  He has helped more than 1000 families obtain home ownership and 100% of his business is from Realtors, financial advisers and past clients. 

Call today for your free consultation as to which loan is best for you.  678-234-0545 or craig_bland@countrywide.com.