Purchasing a home, especially for the first time, can be a daunting knowledge. There are never-ending credit checks, bank checks, employment checks, assessments and more paperwork than seems to make logic. Adding to the anguish associated with purchasing a home is the endless list of charges that are added to the price of the mortgage. In addition to the interest ratio quoted for the loan itself, financiers add other stuffs to the closing costs, including review fees, loan start fees, credit report fees, document research fees, postage fees and all method of other items that are often not even declared by the lender until closing time. The mortgagor often ends up suffering from a form of “sticker shock” at closing time, as the charges associated with closing on the advance are often significantly higher than expected. That may change, however, as some banks are about to announce so-called “no fee” mortgages.
The concept of advancing without a long list of extra fees isn’t new; banks have been offering “no fee” home finance loans for several years. The continued boom in the domestic real estate market has prompted raised competition among lenders. Dropping the listed fees from first mortgages is the latest effort by several large banks to try to stay onward of the competition. The charges, some of which are nothing more than added-in revenue, will still exist. It just isn’t possible to find a mortgage without a credit check or a review of the property. What the “no fee” mortgages proposal is an interest rate that is a little higher than the standard mortgage. The fees are simply turned into the total price, and the mortgagor has a much simpler set of paperwork at ending. Lenders think that by restructuring the process, overall costs can be dropped, and the savings can be passed on to the buyer.
Those interested in buying a home with a “no fee” mortgage should ask around, as some large national banks are offering them now. Be alert that the name is a bit of a misnomer; “hidden fee” would probably be more correct. Still, the procedure is simpler with a “no fee” mortgage, and there is absolutely less “sticker shock” at ending time.