The Catch Of Zero-Closing-Cost Loans

• Print Articles

Summary: Most lenders offer loans with zero closing costs, but those loans come with higher interest rates. If you’re closing costs seem high, determine what is included. Shopping around with different lenders and checking out various closing costs will help you zero in on the best deal.

Q: What is the catch with all the advertisements that claim they can give you a home loan with zero closing costs?

Our loan officer’s good faith estimate was over $12,000 on a $400,000 loan. Do those other companies take advantage of you in some other way?

A: You can get a loan with zero closing costs, but you will pay a higher interest rate. Almost all lenders will offer to do this. Typically, you'll pay .25 to .50 percent higher on your interest rate.

But, the first question you have to ask is what does the $12,000 include? It seems high to me.

I'd talk to several different lenders and try to get them to bid on your business. Shopping around really works, and you'll probably come up with a better offer.

See more articles on this topic by clicking on the "RELATED ARTICLES" above and to the right.

We have over 5000 articles on Real Estate Advice, Personal Finance Advice and Consumer Advice on our site. We encourage you to look at these articles. As always, if you have a comment on our articles, don't forget to post your comment below. We thank you for coming to ThinkGlink.com.

© Ilyce R. Glink. All rights reserved. This content may not be used, distributed, syndicated, compiled or excerpted in any medium or form without written authorization from Think Glink, Inc. For information on syndicating ThinkGlink.com please contact us.

Related Topics

• closing, 
• closing costs, 
• interest rates, 
• mortgage lenders

Rate this article

• Average rating of 5 from 1 reader

Comments

View all ThinkGlink events