Does a Zero-Point, Zero-Fee NJ Home Mortgage Really Exist?

The answer is absolutely. But there are some important factors to consider before exercising this option when purchasing a new NJ home mortgage. This article will help to dissect this NJ home mortgage opportunity.

Put simply, no-cost home mortgages do not eliminate costs. This is an extremely important fact to remember. It actually bears repeating: No-cost home mortgages do not eliminate costs. They simply convert the costs from being paid upfront to costs paid over time. In addition, a no-cost NJ home mortgage carries higher interest rates – which may be better for some borrowers, but definitely not for others. However, a no-cost NJ home mortgage is easier for the lender to shop to the consumer because of their inherent simplicity. As a result, the borrower can actually get a pretty good deal.

What Exactly Is a No-Cost NJ Home Mortgage?

A no-cost NJ home mortgage is one in which the lender pays the borrower’s settlement costs with the following exceptions:

• Per diem interest – which is interest from the closing date to the first day of the following month.
• Escrows for taxes and insurance, which are borrower funds set aside to assure payment of the borrower’s future obligations.
• Homeowner’s insurance is not covered because, while the lender requires it, it also benefits the borrower. In addition, title insurance is not covered because it is optional and therefore paid for by the seller.
• Transfer taxes, if any, are not covered because the amount is sometimes uncertain, and it is usually set by a government entity.
• All other costs, however, are including the mortgage broker’s fee, if there is one, is paid for by the lender in the no-cost NJ home mortgage.

No-Cost NJ Home Mortgage: Additional Considerations

• One of the worse mistakes that a borrower can make or assume is that “no-cash” means that you don’t have to pay the settlement costs at closing. The costs are simply added to the NJ home mortgage loan balance, so the borrower pays them, over time, with interest.
• The lender of the NJ home mortgage finds the interest rate by estimating the costs for which they are responsible for inserting into the loan and then find an interest rate that justifies the costs.
• The benefit of the no-cost NJ home mortgage loan is the savings in cash outlay at the outset, while the cost is the higher rate. The longer the borrower has the NJ home mortgage, the higher the cost. A borrower, therefore, with a long time horizon that takes a no-cost NJ home mortgage only save cash potentially is making a bad deal.
• A no-cost NJ home mortgage can help you be protected from being overcharged. In most instances, a borrower typically shops for rates and points, ignoring other additional settlement costs. As a result, they usually find out about these costs after they submit an application, and even then, they only receive estimates that are subject to change. This provides the lenders with ample opportunities to pad their own fees and mark up those of third parties. However, when responding to a borrower about a no-cost NJ home mortgage loan, lenders do not have that luxury.