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Debt Free Da…,  in 85260

I keep seeing people on here talking about no cost mortgages. There are none. Lenders just raise the rates

Asked by Debt Free Dave, 85260 Wed Jun 4, 2008

to cover the closing costs. I'm not saying that there is anything wrong with this, it's just not a straight way to present what it is.

http://getprequalified.com/article/105036/mortgage_loan_prog…

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Mortgage companies have to raise the rates to cover the associated cost to underwrite and fund the loans. Many of the prior answers suggest that it is misleading. I submit to all of them that there answers are misleading as well. If you only live in a house for 3 - 5 years, you will probably pay less over that time than paying closing costs and origination fees upfront. I am not a mortgage lender but a Finance Grad. Dig into the amortization of the loan and make an educated decision as to what works best for you.
0 votes Thank Flag Link Fri Jun 6, 2008
It's called "honesty in advertising," and unfortunately there are still lenders out there that "mislead" consumers not telling them the "entire" story.
0 votes Thank Flag Link Fri Jun 6, 2008
Dave,

I agree totally, it's misconceiveing and buyers usually don't know that is happening. Another thing that gets me is when buyers look online for rates......I always tell them, go ahead! Then tell them...you might find it somewhat confusing because you will see different rates most likely at different websites, only on a specific program that you have to qualify for! Ofcourse they never list the qualifications for the product or the sales person would miss out on the call.

Recently I had a buyer who told me he wanted his payments in the 800-900 range on 152K with little downpayment. He got that at one of the websites as a quote off of lending tree. However they did not include his taxes and insurance, or MIP on an FHA loan which amounted to 250$, and absolutely has to be included. So I had to explain that. To me it's essentially bait and swich to a certain degree.
0 votes Thank Flag Link Thu Jun 5, 2008
Hi Debt Free Dave:

Thank you so much for the reminderl. Since I am not a mortgage broker, I always refer my clients to a mortgage broker for all mortgage related information. However, they will sometimes ask us questions during our encounters and it is always nice to have some of the basic knowledge handy.

I agree that it is misleading and I always do remind my clients that they have to compare the true cost of the mortgages and determine which way to go depending on their needs and wants.

Sylvia
0 votes Thank Flag Link Wed Jun 4, 2008
Sylvia Barry,…, Real Estate Pro in Marin, CA
MVP'08
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