What is a No Point - No Closing Cost loan?

This type of loan is not well known...probably because banks would rather have you pay for your closing costs instead of paying them for you. With this program, the borrower does not pay the costs typically associated with a loan closing such as lender's title insurance, survey, attorney's fees, appraisal, credit report, document preparation and underwriting fees. The borrower does not pay any points either. In addition, the borrower pays no application fee and no rate-lock fee.

The borrower is only responsible for 3 items...

1. PRE-PAID INTEREST - This is interest from the date-of-record of the loan until the end of the month. This interest charge takes the place of the first month's mortgage payment. For example, if your loan goes to record on March 20, you would be charged for 11 days worth of pre-paid interest and your first mortgage payment would be May 1. The purpose of pre-paid interest is to bring you up to speed with the bank's monthly cycle of collecting payments on the first of each month. Pre-paid interest can be rolled into the loan amount if the client wishes.

2. ESCROWS - The client is responsible for funding an escrow account with the new lender for the purpose of having the lender pay the property tax and homeowner's insurance bills. The amount escrowed depends on what part of the payment cycle you close in...it can be as few as 2 months or as many as 11 months. In the case of a refinance, you will receive a check for a similar amount from your old bank after closing for the balance of your escrow account with them. Escrows are mandatory of your LTV is greater than 80% but can be waived (for a small fee) if your LTV is less than 80%. The fee to waive escrows is typically 1/4 of 1% of the loan amount and goes to the lender, not to us. Escrows can be rolled into the loan amount if the client wishes.

3. APPRAISAL - We ask that our clients pay the appraisal fee directly to the appraiser when it takes place. This amount is then credited back to you at the closing table.

What's the catch?

There is no catch, but there is a cost. A No Point - No Closing Cost loan is typically priced .25% over a No Point loan (customer pays their own closing costs). A 30 Year Fixed Rate loan typically breaks down as follows...

As you can see from this example, although the No-No program has a higher monthly payment, it has no cost associated with it. This means that you start saving money right away.

If you choose the No Point loan, you would spend $1750 in closing costs to save only $33 per month. In other words, it will take you 53 months to break even....that is almost 4.5 years before you start saving money!

If you choose the loan with 2 points, you would spend $5,750 in points and fees to save only $98 per month. That is a 59 month break-even period...5 years!!!

The most important reason not to give the bank any of your money is flexibility. If you go with a No-No program and rates drop, you can refinance into another No-No program and start saving money immediately with no cost.

Are you willing to bet $1750 - $5750 of your money that rates will not go any lower in the next 5 years? With a No-No program, you take all the guesswork out of trying to time the low point of the market...if rates drop, simply refinance to the lower rate at no cost.

I'm not too sure about this...

Not a problem, we offer all types of loans...not just No Point - No Closing Cost Loans.

Our clients don't pay application fees or rate-lock fees. We don't want your money, just your business.