What is a No-Cost Mortgage?

Getting a no-cost mortgage can provide you with a big financial benefit as a potential homeowner. Here are the basics of the no-cost mortgage and how they work.

No-Cost Mortgage

The no-cost mortgage is a type of loan in which you do not have to pay anything to the bank for the loan. With most mortgages, you are going to have to pay somewhere between $4000 and $6000 in closing costs. Therefore, this is typically a very expensive proposition. However, with the no-cost mortgage, you are not going to have to come up with any of these costs on your own. In fact, the lender is actually going to pay everything for you.

No-Cost Mortgage vs No-Cash Mortgage

Many people get the no-cost mortgage confused with the no-cash mortgage. While they are similar, there is one big difference. With both of these products, you are not going to have to come up with any cash out of your own pocket to pay for the closing costs. However, with the no-cash mortgage, you are still going to be paying for it over the long-term. The lender is simply adding this cost on to the amount that you are borrowing. With the no-cost mortgage, you never have to pay for the closing costs.