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Let's Be "Totally Clear" About No Closing Cost Loans

"No Closing Cost" mortgages are quite popular with consumers, yet the terminology is confusing since these mortgages don't eliminate costs but rather shift them from upfront costs to costs paid over time.

In "no closing cost" mortgages, the closing costs are paid by the lender out of the fee they receive for delivering the loan to investors at a certain interest rate. The higher the interest rate on the loan delivered - the higher the fee paid to the lender. Since the lender pays the closing costs out of their loan revenues, it means that they will offer you an interest rate that will pay them sufficiently to produce their regular loan revenue plus an additional amount to cover the closing costs.

In practice consumers choosing this option will pay a slightly higher interest rate over the life of the loan than they would if they paid the closing costs upfront themselves. However, in addition to reducing upfront out of pocket costs, "no closing costs" loans can make comparison between lenders easier since the interest rate is the only financial point of differential.

At Total Mortgage we call our version of this popular loan approach the Total Fees Paid loan...clearly indicating that we are paying all lender-related fees. Upfront costs not included in the Total Fees Paid loan or other lender's "no closing costs" loans include charges for per diem interest, tax and insurance escrows, owner's title insurance and transfer taxes.

Our mortgage professionals are prepared to assist you in examining the pros and cons of the Total Fees Paid loan:

  • speak with a mortgage professional now by calling 877-868-2509
  • Chat Live on-line with a mortgage professional

Call a Total Mortgage expert now at 877-868-2503 to find out how we can customize a mortgage loan with some of the lowest current mortgage rates for you.

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