Debbie Siegel's Mortgage Minute
"No Closing Costs" Too Good to be True?
While closing costs can differ depending on how and where you borrow your money, someone has to pay the associated costs, and that someone is you.
It's important to understand what mortgage professionals mean when they refer to "closing costs." Scratch the surface of the long list of costs associated with a closing and you'll see fees for the title search, title insurance, and attorney fees.
Closing is stressful and it's tempting to look the other way and simply ask for the total amount due and where to sign. However, it's important to know all of your closing costs and how they're being paid before you sign that dotted line.
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If you hear "no closing costs," ask this vitally important question: "What am I responsible for paying?" A lender may state that you're getting a no-closing-cost loan, but that you're responsible for paying the attorney fees and recording charges. Well, those are closing costs.
When closing on a property, it's important to be aware of at least three things:
- Interest rate and Term
- Fees
- Points
In many cases the costs of the loan that you aren't paying are being absorbed into a higher interest rate. Ask your mortgage provider to give you a good faith estimate of the closing costs you'll have to pay ahead of time. They differ from loan to loan, but generally range from about 3-6% of the mortgage price.
Nothing in this world is free, so ask lots of questions when being sold a "no cost" loan. As I always say, it's important to consult a mortgage professional you know, like, and trust before making a final decision.
Got questions about real estate financing? Contact
Debbie@westchester-mortgage.com
or 617-965-1236. She'll consider them for
inclusion in a future column. Debbie Siegel is president of Westchester
Mortgage in Newton, Mass. She is licensed in several Northeastern states.
