The simple answer: NO!
Nothing is for free in this world, let alone your mortgage. Many people will advertise “Zero Fees Refinance” or “No Points Home Purchase,” but that is just creative advertising. A mortgage company may very well not charge any points or fees when doing a home loan for you, but that only means it is built in to the rate/term of your mortgage. There is no such thing as a free mortgage.
Essentially here is how it works (this is all hypothetical and not a real loan estimate – just an example). Let us say that the base rate (par rate) is 3.5% on a 30 year fixed mortgage. A Loan Originator may then offer you a rate of 3.75% and this is where his/her commission is built in for the themselves and the company they work for. But the Loan Originator could then also offer a 4% rate and is then able to pay for the majority (if not all) of your closing costs for your loan. Your general closing costs are: Title search, credit report, attorney fees, tax escrows, title insurance, and home owner’s escrows – and by raising the rate a little bit (also referred to as a lender credit) you can pay towards your closings costs. So even though you did not pay for the closing costs out of pocket – you paid for it in the rate increase (which can sometimes end up costing you more over the length of the loan).
So how are loan originators, Mortgage Lenders, and Mortgage Brokers able to do this? Its simple: supply and demand. There are many companies that buy mortgage notes to own them as an investment or to service them as a business. So when a mortgage company closes a loan at 4% when the majority of loans being done are at 3.5% – they can sell that loan for more profit.
If you are looking to refinance or purchase a home I would be more than happy to sit with you and discuss your options and show you how to capitalize on savings. We are Northeast Financial, a Connecticut Mortgage Company, that does home mortgage loans for Connecticut residents. Call me today for a free consultation – you won’t regret it.
Thank you,
Michael Meyer
Senior Vice President of Northeast Financial
NMLS#117875
Mike@northeast-mortgage.com
860-876-0572
210 S. Main St Middletown, CT 06457
Company NMLS#117273
http://www.zillow.com/profile/MichaelMeyer8/
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