No Cost Mortgages

No Cost Mortgages



No Cost Mortgages
When you​ are dealing with mortgages,​ it​ is​ important to​ check twice the​ calculation as​ well as​ the​ English when the​ lenders specify the​ word No cost Mortgages.
The fact is​ that no cost mortgage means it​ will cost something,​ now the​ question arises in​ your mind how much it​ cost the​ answer is​ the​ cost depends on​ what kind of​ mortgage you​ plan to​ go .​
There are two types of​ basic cost involved while getting mortgage,​ in​ one type of​ cost the​ lender cannot control that includes the​ appraisal cost,​ filing fees,​ title search,​ attorney fees etc,​ and the​ next type of​ cost is​ the​ lenders cost that is​ loan application fees,​ credit check,​ admin fees and processing fees etc,​ with out which nothing is​ possible.
To few lenders no cost means they do not want any cost from their pockets,​ all the​ cost will be added in​ the​ loam amount,​ for instance the​ loan cost is​ $5,​000 and you​ plan to​ borrow $150,​000 in​ this case the​ $3,​000 gets added up with the​ loan,​ and ultimately you​ will be borrowing $1,​53,​000 that is​ with interest for the​ entire amount .​
In this case when you​ take 30 years loan at​ 6.25% rate interest the​ monthly interest with principal is​ $942.05 and the​ interest is​ $18.47,​ which is​ $18.47 per month more than $923.58 you​ would make on​ $153,​000 .​
You may not realize you​ are paying interest for $3,​000 every month until you​ clear the​ entire amount,​ in​ addition to​ that this $3,​000 wont be paid off till the​ 20th month of​ mortgage well into the​ subsequent year its only after 19th payment that the​ principal you​ owe will reduce below $150,​000 to​ be exact $149,​948.25 .​
How does this sounds to​ you,​ this is​ the​ way no cost mortgage works,​ you​ pay accumulated interest on​ unpaid balance of​ the​ loan every month and to​ pay off the​ $3,​000
You would be paying $18.47 besides the​ interest you​ pay for $1,​50,​000 .​
So if​ you​ have paid that $3,​000 from your pocket you​ would be paying the​ interest with principal for the​ actual amount you​ are borrowing,​ just by the​ word no cost mortgage you​ don’t start paying the​ loan until your loan reached 20 months.
In some cases you​ may not pay any cost in​ the​ beginning but you​ will end up paying with closing cost and sometimes the​ lender will take in​ charge of​ paying all the​ cost like application fees,​ commission,​ attorney fees and then in​ turn charge the​ borrower with high interest rate .​
By this time you​ could get a​ clear idea how much it​ will cost you​ for no cost mortgage
No cost loans are very expensive,​ just because its convenient that you​ don’t spend a​ penny from your pocket it​ is​ better,​ in​ a​ long run it​ cost you​ more than to​ spend from your pocket,​ so it​ is​ important to​ remember that you​ are not really saving money by opting for no cost mortgage.




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