Bankers Dont Want You to Know That You Pay for Your No Cost Home Loan Forever

With mortgage rates continuing on a downward trend, the competition in the business is fierce. A day never passes that I don't hear some crazy advertisement about a new loan program that XYZ mortgage company has and no one else offers. One of the oldest programs remains steadfast in both its high profile and its duplicity. This program is the No Cost Home Loan -- the one bankers say is free, but you actually pay for as long as you have the loan.

The no closing cost home loan is virtually everywhere. It is advertised in the mail, on radio and on TV all the time. "Hey, refinance your loan today, and there will be no closing costs," the ads scream. Wow, a free loan. Imagine the money you'll save. So, if you are in the market for a refinance loan or home equity line, which you probably should be, with rates at all-time lows, you might consider running to XYZ mortgage company, who is now offering free mortgage loans.

Just be careful you don't go bankrupt, along the way. Remember, the old cliche, Nothing in life is free, because it makes a lot of sense. You actually can get a mortgage with little or no closing costs. What bankers don't tell you (one of their great secrets) is that you pay a higher interest rate than you really qualify for, when you get your loan for "free." So, you might save $2,000 or $3,000 in closing costs, but your monthly payment could be $100 to $300 higher than it would have been if you had actually paid the costs.

Imagine taking this loan and saving $2,000 in total closing costs. Perhaps you borrow $200,000. Now, if you simply pay all the costs and tell the banker you want the best rate available, let's say it is 6% for this example, you would have a monthly payment of $1,199. Now, let's assume the wiley banker convinces you to pay no closing costs and take an in terest rate of 7%. He might say, "Now, your interest rate will be a bit higher, but you'll save $2,000 in closing costs." Sounds great, you might think.

What he doesn't do, though, is spell out the difference in the 6% rate you could qualify for, versus the 7% rate you choose to take for your "free" loan. If you borrow $200,000 at 7% interest, your monthly payment is $1,330. This is $131.00 more each month than you will pay on the same loan at 6% interest.

If you choose to pay the closing costs and save $131.00 monthly, it will take you 15 months to get your $2,000 in closing costs back. Now, if you keep this loan for five years beyond that first 15 months, you will save an additional $7,860 at the 6% interest rate. If you listen to the crafty banker, selling the No Cost Loan, you'll allow nearly eight thousand dollars to drift right up your home's chimney.

Unless the difference in the interest rate on your no closing cost loan and the loan with costs is a tiny amount, say .125%, you are almost always better off paying the costs. Be sure to ask what the difference in the rates is. Then learn exactly what the total closing costs will be. Calculate the difference in the two monthly payments (one with closing costs and one without). If that amount will pay back your closing costs in two years or less, and you intend to remain in your loan for at least five years, pay the costs and take the better rate.

Use this method, and you'll never go wrong.

Mark Barnes is author of the wealth-building system, Winning the Mortgage Game and other investment real estate books. He is also a suspense novelist, and his new novel, The League, will thrill both suspense and sports fans. Learn about Mark's wealth-building system and get his free home loan course at http://www.winningthemortgagegame.com. Learn more about The League and read an excerpt at http://www.sportsnovels.com

---

Private Mortgage Insurance Basics

Will you be asked to pay Private Mortgage Insurance, or PMI? Most lenders will require you to carry PMI if you cannot put 20% or more of your loan amount forward as a... Read More

Finding the Best Home Improvement Loan Rate

If you're looking for a good home improvement loan rate, you might have to take your time and shop around a little bit.The home improvement loan rate that you get can depend on... Read More

How to Get Cheap Home Loans with a Bad Credit

It's been years since you made any major improvements to your home and it's about time. Your spouse and children are also urging you to give the house a facelift. So, what do... Read More

Fees Paid To Brokers By Mortgage Lenders Are Far Too High

Procuration fees paid by some sub-prime lenders are too high.Fact.There can be no justification for some of the fees paid by lenders. Proc fees of 2.75%-plus are simply deplorable when it is clients... Read More

Reverse Mortgages Learn The Facts First!

Reverse Mortgages, Most Common Features:Many offer special appeal to older adults because the loan advances, which are not taxable, generally do not affect Social Security or Medicare benefits.Depending on the plan, reverse mortgages... Read More

How to Find a Good Online Homeowner Loan

A quickly growing trend in lending is the online homeowner loan. This loan uses the equity that you have in your home to secure the loan amount, and features both a convenient way... Read More

Zero Down Payment Mortgage ? Can It Be Done?

"I've been renting for years now; I've always paid my rent on time. I'll start a savings account soon, so I can buy a house": sound familiar? How much is in that savings... Read More

Why Refinance Back into a 30-Year Loan?

One of the biggest reasons homeowners refinance their mortgage is to obtain a lower interest rate and lower monthly payments. By refinancing, the borrower pays off their existing mortgage and replaces it with... Read More

A Mortgage and Bank Trick You Should Avoid at All Costs

Once you've purchased your home, you will begin to get correspondence from your lender about a "Mortgage Reduction Program," in which you can cut years off your mortgage, without adding money to your... Read More

Home Loans For People With Poor Credit - Understanding The Requirements For a Subprime Mortgage

Home loans for people with poor credit demand that you understand the requirements for a subprime mortgage loan to get the best rates and terms. By satisfying the requirements, you can be assured... Read More

How to Get a Cheap Homeowner Loan

If you're looking for a cheap homeowner loan, you might be wondering what you can do to reduce the amount that you have to pay.The simplest answer lies in two things? shopping around... Read More

Why a Mortgage Professional Beats a Banker Every Time -- The Story Tells It All

The best way to explain why a mortgage professional is always better than a banker is to use an anecdote. My parents lived in the house I grew up in for 35 years,... Read More

Mortgage Loans For People With Adverse Credit - How Much Should You Borrow

"How much should you borrow?" is a question people with adverse credit wrestle with. The answer is simply as much as you can afford. This is probably less than what you will qualify... Read More

Residential Mortgages ? a Step Ahead on the Property Ladder

Doesn't Residential mortgage give the impression that they are a different breed of mortgages? They are often thought at the first instance to be a complex term, which they aren't. They are actually... Read More

Follow A Few Simple Steps To Make Shopping For Your New Home Loan A Little Easier

It is likely to be one of the largest purchases of your life, and it can be extremely nerve racking and overwhelming. Buying a new home! Whether you are buying your first home,... Read More

Types of Home Equity Loans

There are at least two types of home equity loans.The first is a term or closed end loan and the second is basically a line of credit. Most people prefer to refer to... Read More

Guide to Flexible Mortgages

Outlined below is a useful guide to flexible mortgages. Flexible mortgages are also known as Australian Mortgages because they usually feature something which is common in Australia - interest recalculation on a daily... Read More

Real Estate Tip: Escrow Accounts -- Do You Really Need Them?

If you have a mortgage on your property, whether it's for your personal residence or a real estate investment, chances are you have an escrow account. But if you are working on building... Read More

Secrets Your Banker Wont Tell You - Which Loan is Best for You?

Recently I was driving in my Car and I heard an Ad for a Mortgage lender who claimed they would help you find the Best Loan out of over 400 Different Loan Types.... Read More

Some of the Available Loan Types

There are many mortgage products available on the market today. We can help you find out which one is right for you. Here are the most common options.Fixed Rate Mortgages (FRM's)* Interest rates... Read More

Understanding Mortgage Points

When a mortgage broker asks a borrower to pay points, he or she is asking for a lending fee expressed as a percentage of the value of the loan. For example, two points... Read More

Ending Your Private Mortgage Insurance Early

Private mortgage insurance, or PMI, is the safety net of the lender. PMI benefits lenders because it guarantees payment on the balance of loans not covered by the sale of foreclosed properties.If a... Read More

Home Refinancing Scam ? Thieves Use Identity Theft to Steal Your Equity

Since the demise of the stock market in 2000, the real estate market has been booming. Investors who are justifiably cautious about investing in stocks have been investing in homes. This has driven... Read More

Refinancing vs Line of Credit

Refinancing vs line of credit are two popular options you have when deciding the best way to take equity out of your home. Sometimes it makes sense to establish a line of credit.... Read More

Kings Bay Saint Marys & Kingsland Georgia - Affordable Home Mortgages

Buying a home is usually the largest purchase any of us will make in a life time. When choosing a home, you want to find one that suits your families needs best. Take... Read More

The Top 5 Things You Must Know Before Applying for a Mortgage

You've been thinking about buying your own home for quite a long time, and now you're ready to take the plunge. You've been saving money for a down payment, and you know the... Read More

Sound Financial Standing Entails Capital Raising Remortgage

Raising capital is integral for growth and expansion of an individual in more than one way. Every project and venture is meant to contribute in some way to the augmentation of human beings.... Read More

Real Estate Lender - Get Approved For a Mortgage Loan Online

Real estate lenders now offer mortgage loan quotes and application online. You can be approved for a mortgage loan online in a matter of a few weeks. With online real estate lenders you... Read More

Securing a US Commercial Mortgage

What's the most efficient way to secure a US Commercial Mortgage? Work with a mortgage broker who specializes in this area. If you've ever applied for a loan, you're familiar with the mountain... Read More