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No Fee Mortgages Coming Soon
By: Charles Essmeier
Buying a home, especially for the first time, can be a daunting experience.
There are endless credit checks, bank checks, employment checks, appraisals and
more paperwork than seems to make sense. Adding to the angst associated with
buying a home is the endless list of fees that are added to the cost of the
mortgage. In addition to the interest rate quoted for the loan itself, lenders
add other items to the closing costs, including appraisal fees, loan origination
fees, credit report fees, document preparation fees, postage fees and all manner
of other items that are often not even mentioned by the lender until closing
time. The borrower often ends up suffering from a form of “sticker shock” at
closing time, as the costs associated with closing on the loan are often
substantially higher than expected. That may change, however, as several banks
are about to introduce so-called “no fee” mortgages.
The concept of lending without a long list of additional fees isn’t new; banks
have been offering “no fee” home equity loans for several years. The continued
boom in the national real estate market has prompted increased competition among
lenders. Dropping the itemized fees from first mortgages is the latest attempt
by several large banks to try to stay ahead of the competition. The fees, some
of which are nothing more than added-in profit, will still exist. It just isn’t
possible to obtain a mortgage without a credit check or an appraisal of the
property. What the “no fee” mortgages offer is an interest rate that is slightly
higher than the standard mortgage. The fees are simply rolled into the total
price, and the borrower has a much simpler set of paperwork at closing. Lenders
think that by streamlining the process, overall costs can be lowered, and the
savings can be passed on to the customer.
Those interested in purchasing a home with a “no fee” mortgage should ask
around, as several large national banks are offering them now. Be aware that the
name is a bit of a misnomer; “hidden fee” would probably be more accurate.
Still, the process is simpler with a “no fee” mortgage, and there is definitely
less “sticker shock” at closing time.
About the Author:
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro
Marketing, a firm devoted to informational Websites, including http://www.End-Your-Debt.com,
a Website devoted to debt consolidation information and http://www.HomeEquityHelp.net,
a site devoted to information on home equity loans.
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