Mortgage Lowdown

Terms could be deceptive at times. The best possible example of this kind is the term — cost and cash — getting confused in mortgage deals. Two terms are invariably used i.e. no-cost and no-cash. While both refer different things altogether confusion remains the common factor for many customers. 

But don’t get confused anymore with these similar "looking" terms. The confusion is considered to be one of the worst mistakes a borrower can make in a mortgage deal. Borrowers pay a higher interest rate on a no-cost mortgage. The lender finds that rate by estimating the costs for which he would be responsible, and then finding the interest rate that justifies paying those costs. Whereas in no-cash case, during closing, borrower does not pay the settlement costs, and the lender doesn’t pay them either. The costs are added to the loan balance, so the borrower pays them over time, with interest. Now you will get it right. Right?

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This entry was posted on Thursday, July 6th, 2006 at 10:35 am and is filed under Interest Rates. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.