No Fee Mortgages

There is no doubt that mortgages is an extremely competitive market and as a result, a large number of the players in this market are now offering so-called “no fee”mortgages.

According to these heavily advertised offers, you can get a mortgage where you only pay the interest and and there will be no additional costs at closing. It seems too good to be true, doesn’t it?

So, what’s the real deal with no fee mortgages?
Well, it may be possible to save money with these types of mortgages but it is certainly not anything like as clear cut as it might appear in the advertising.

These companies are not just going to drop something that amounts to a good chunk of their profit on the deal. No company in history has ever just cut away something profitable like that without replacing it with something else and this scenario is no different
How do these mortgages work?

Well, basically, you’re going to be charged a higher rate of interest in this type of deal than you would be if the company was itemizing closing fees. The difference in profit for the company must be made up from somewhere and basically here it’s going to come from charging you more for borrowing the money.

This is not necessarily a bad scenario for you it but it just means that the mortgage company are earning their profits in a different way. The rays rate of interest may make the financing more eye-catching to purchasers in the secondary market

The Company may also make some more profit by reselling your business to another mortgage lender in the market at a later date
so how does all of this affect you?

Before we go any further, I’m going to give you the oldest piece of advice in the book. I know this one is a cliché but it got to be that way for a reason, it’s true! You’re going to have to shop around. This is absolutely vital and the only way you’ll be able to tell if what you’re actually getting is a good deal or at the same all numbers have just been juggled to make it seem more attractive.

But apart from this cliché, what’s also important here is not only that you compare the large numbers, but that you also compare the details as well. It’s only when you examine all of the variables, that you will be able to tell which mortgage company is actually offering the most effective product for you. Of all the variables, probably the most important for you to look at is how much you’re actually going to pay, in total, over the period of the loan
it could be argued, that by me is misleading customers of the mortgage companies are in actual fact being dishonest and that consumers are being led into believing that in actual fact they will get a lower cost mortgage as a result of going the no fee route. In a sense, this is true but as what all unclear advertising of this nature a clever consumer will always win out.

Ultimately, the moral of the story here is that while some of the mortgage companies may be slightly underhand, if you read the small print and tot up the numbers, you can make everything clear for yourself before going ahead and making any decisions that will finish up costing you more in the long run.

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