No Points - No Closing Costs Loan?

What is a No Point - No Closing Cost loan?
This type of loan is not well known...probably because banks would rather have you pay for your closing costs instead of paying them for you.
If you can drop your rate by as little as .25% and not pay any closing costs, doesn't it make sense for you to refinance, even if you'll only be in the home for another two years?
Any loan where the broker or lender pays all of your closing costs is commonly referred to as a ``No Closing Cost'' loan. These closing costs would include title and Escrow fees, appraisal, Lender's fees, credit report fees, and other expenses which are non-recurring over the life of the loan. Lenders use the term non-recurring to refer to one time expenses, and exclude items such as interest, insurance, and property taxes, which are considered recurring closing costs because they will continue to be expenses every month. Recurring costs are not covered expenses in a No Closing Cost loan.

What’s the catch?
There is no catch, but there is a cost. A No Point - No Closing Cost loan is typically priced at least .25% over a No Point loan (customer pays their own closing costs), and .5% over the typical loan that includes closing costs and a 1% origination fee… A 30 Year Fixed Rate loan typically breaks down as follows: (Example doesn’t reflect current rates)

As you can see from this example, although the No Point-No Closing Cost (No-No) program has a higher monthly payment, it has no cost associated with it. This means that you start saving money right away.
If you choose the No Point Loan, you would spend $3750 in closing costs to save only $66.48. In other words, it will take you 56 month to break-even. That is 4.6 years before you start saving money!
If you choose the loan with one point, you would spend $7750 in points and fees (or have $7750 less money cash out) to save you only $132.24.That is a 58.5 month break-even period…
The most important reason not to give the bank any of your money is flexibility. If you go with a No-No program and rates drop, you can refinance into another No-No program and start saving money immediately with no cost.
Are you willing to bet $3750 - $7750 of your money that rates will not go any lower in the next 5 years? With a No-No program, you take all the guesswork out of trying to time the low point of the market...if rates drop, simply refinance to the lower rate at no cost.

FOR MORE INFORMATION, OR TO APPLY NOW, CALL (310) 600-5106

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