Mortgage Lowdown

While you go for a no-cost mortgage a couple of points should be very clear to you. A no-cost mortgage is one on which the lender pays the borrower’s settlement costs. But there are certain exceptions to that. The per diem interest is the interest from the closing date to the first day of the following month. It is not included because it is not known until the exact closing date is set.

The taxes and insurance escrows involved, which are borrower funds set aside to assure payment of the borrower’s future obligations, are not covered because they are not a cost of the transaction. There is also a condition of homeowner. In that case, homeowners’ insurance is not included because, while required by the lender, it also benefits the borrower. Owner’s title insurance is not covered because it is optional or paid by the seller. When it comes to transfer taxes, if any, are not covered because the amount is sometimes uncertain, and it is set by a governmental entity. You can’t ignore the other costs, including the mortgage broker’s fee if there is one, which are usually paid by the lender.