Purchasing a home can be a very exciting time in any person’s life. You begin to scout for homes, meet with a real estate agent, and soon enough, with some luck, you have found your dream home. Once you have found your dream home, the next step is to obtain a great home loan to finance your purchase. Unfortunately, this step can be a less enjoyable part of the process. Many future home owners have many questions when it comes to home loans. Before securing a home loan, it is important to become aware of your options and familiar with the loan process to ensure a smooth and financially beneficial home purchase.
What Are No Closing Cost Home Loans
A no closing cost home loan is a mortgage loan that does not require the borrower to pay any closing costs. Closing costs are fees that a borrower usually pays, either at the time of closing, or that are rolled into the loan and paid throughout the duration of the loan. These fees can vary from hundreds to thousands of dollars depending on the lender, loan officer, and loan itself. When these closing costs are added to the loan, the borrower will end up paying interest on these costs. With everything considered, closing costs can be a very expensive part of the loan process. Because of this expense, many people will opt for a no closing cost home equity loan.
How To Get A No Closing Cost Home Loans
Many lenders are offering no closing cost home loans. To obtain one of these loans, it is necessary to contact a loan officer that offers this type of loan. Once you contact a loan officer, you will be required to complete an application to see if you are eligible to receive a no closing cost home loan. Generally, these applications will ask for personal information, general debt information, income information, and will be followed with a credit report. Your loan officer will work to get you qualified with a lender to receive a no closing cost home loan. Your acceptance will be based on the amount of money you are willing to put down as a down payment, your credit history, your debt to income ratio, and the ratio of your income to the amount you are asking to borrow. Once your loan application is accepted by a lender, you may then receive your loan and become a home owner.
While you will not be required to pay any closing costs on your no closing cost home loan, you will still want to be clear on what other fees the loan entails. There may be processing fees, broker fees, and other fees associated with your loan. While it is very rare to receive a loan that requires no fees at all, it is possible to pay very little in fees. To ensure that you receive a great deal on a loan, it is important to closely look over all paperwork and documentation, and ask questions on anything that may be unclear during the loan process. Your loan officer is there to make the loan process as simple as possible, and should be there to answer any questions you may have.
What You Need To Be Aware Of When Obtaining A No Closing Cost Home Loan
While a no closing cost home loan has no associated closing costs, the lender and loan officer do need to be profiting from the loan. They are able to make a profit from other fees you are charged and by what interest rate you are given. Generally, if a loan features no closing costs, the borrower will be offered a higher interest rate. In some cases, it may be more beneficial to the borrower to take the higher interest rate and pay no closing costs. However, in other cases, it would be more beneficial to secure a lower interest rate and pay closing costs. This is why it is important for borrowers to weigh their options, instead of accepting the first deal they are offered. No closing cost home equity loans can be an incredible deal for informed home buyers, who have reviewed all of their options, and are ready to secure a great home loan.