How do you get a “free” mortgage?
You really don’t. Title companies get paid, lenders get paid, appraisers get paid, the government recording offices get paid, credit reporting companies get paid… it is just a matter of who pays them – you or “the bank”.
Here is how to get the closest thing to a free mortgage that I can think of…
How to get the bank to pay your closing costs
Many times I speak with people who want a “no out of pocket closing costs mortgage”. Note – there is a difference between a “no out of pocket closing costs mortgage” and a “no closing costs mortgage”. The difference simply is that with one, you roll all of the costs into your new mortgage (you will pay the costs, just over the term of your mortgage) and with the other you get the bank to “pay” your closing costs.
Why will the bank pay your closing costs?
They will pay your closing costs in exchange for a slightly higher interest rate.
Put simply, the situation may look like something like this: If you are willing to pay your closing costs and have them rolled into your loan, the rate on your mortgage may be 5%. OR. If you don’t want to pay your closing costs and have the bank “pay” your closing costs – your interest rate might be 5.5%.
A subtle but important difference.
There really isn’t such a thing as a “no closing cost” mortgage – it is just a matter of who pays the closing costs — you or the bank. And if the bank pays them? Expect your interest rate to be higher than it would be if you paid them.