No Cost Purchases
In a purchase situation, a no closing cost option can work extremely well when the borrower has limited
funds available for closing, or when the rate market is declining and the borrower may want to refinance
quickly. No closing cost loans can be used effectively to free up more cash for the down payment or to save
for repairs and other uses. If the seller can not credit for closing costs (due to low equity or other reasons),
a no closing cost loan is the next best alternative. In some cases, a no closing cost loan can give the borrower
more cash than is needed for the direct closing costs, As long as this does not exceed the lender's guidelines
(typically 3% of the purchase price in overall credits), this cash can be applied to other costs within the
transaction. | |
