Most first-time home buyers move within 7 years. Zero-closing cost mortgages can be a smart way to save and plan for your future.
Mortgage closing costs are fees paid for getting a mortgage loan.
Closing costs include appraisal costs, lender costs, and discount points (if you choose to pay them).
Mortgage fees vary by lender. They're also subject to state limitations.
Closing costs aren't paid in advance. On the date of signing, buyers bring their down payment to their closing, plus whatever closing costs are due.
Buyers can also negotiate to have sellers pay their costs through seller concessions.
Seller concessions is when a home seller applies a portion of its proceeds to the buyer's transactional expenses. This can include paying for the buyer's mortgage closing costs, settlement fees, and other taxes and fees.
The third strategy for paying on closing is more advanced. It's called a zero-closing cost mortgage.
With a zero-closing cost mortgage, the buyer willingly accepts a higher mortgage rate than it would other qualify for. In exchange for taking the higher rate, the buyer's lender pays its closing costs.
Usually, a 0.25 percentage point increase creates a credit equal to one percent of your loan size. At today's mortgage rates, on a $100,000 mortgage, you get a $1,000 credit in exchange and pay twelve dollars more per month.
Zero-closing cost mortgage works great for buyers without a lot of cash and who don't want to buy their forever home.
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