I've written blogs about this in the past and feel very strongly about this subject. But, I just came across this online video that backs up my feelings about "No Closing Cost Mortgages".
Local and online banks have been touting these "No Closing Cost Mortgages" as a way to entice buyers and borrowers to take an application. They are feeding on the general fear in the industry right now. Charged by all the negative news in the media about mortgage brokers, they are stealing away market share using scrupulous tactics.
You see, there's no such thing as a "No Closing Cost Mortgage". Why would someone, let alone a bank, want to work for free? They are trying to perceive themselves as the lowest cost alternative when, in reality, a "No Closing Cost Mortgage" costs much more than any other kind!
There are two ways to pay for a mortgage. You can pay an upfront, one-time, fee. This is how mortgage brokers mostly work. The other way is by paying in the interest rate. By increasing the rate they are offering you, banks are collecting more money from you every month for the next 30 years!
It feels nice not to bring money to your closing, but the sad reality is that you are paying a higher rate and higher payments because that bank tricked you into thinking a loan is free. Please do your research! You'll find that the rate those banks offer is much higher than you should be paying.