Mortgage lenders offer a variety of different types of mortgages, and one option is a mortgage with no closing costs. Closing costs in GA are fees related to closing, and generally, buyers pay about 2% to 5% of their home’s value in closing costs. For instance, if you’re buying a $250,000 home, your closing costs can be anywhere from $5,000 to $12,500. Wondering if you should skip these costs by getting a mortgage that doesn’t have closing costs? Here are a few signs you should consider it.
1. The Lender Can’t Roll the Closing Costs Into the Principal
Sometimes, you have to pay closing costs upfront. On the day that the loan closes, you arrive with a check and you pay the closing costs. However, in other cases, you can roll the closing costs into the principal of the loan. Then, you just pay them as you pay the loan. This option can make the buying process easier, but if you can’t find any mortgage lenders who offer to roll-in the closing costs, you may want to consider a no closing cost mortgage.
2. You Can Afford a Higher Interest Rate
When mortgage lenders cover your closing costs, they incur extra costs while offering the loan. To cover their costs on these mortgages, they typically charge a higher interest rate. Take some time to consider how the higher interest rate affects your payments and the interest you pay over the lifetime of the loan. Then, compare that to how a lower interest rate would affect your loan. If you don’t like how the comparison looks, you may want to try to get hold of money to cover your closing costs in GA.
3. You Can Afford a Higher Monthly Payment
If you have a higher interest rate, you tend to end up with a higher monthly payment. Or, you end up with a longer term to keep your payments low. To explain, imagine you can afford the payments on a 15 year mortgage, but you can’t afford the closing costs. When you switch to a mortgage with no closing costs, that drives up your monthly payments. To keep them down, you move to a 30 year mortgage.
4. You Don’t Have the Funds
Sometimes, you don’t have a lot of choice. When you’re working with mortgage lenders, you have to come up with a down payment, and it can be hard to also come up with closing costs. If you don’t have any extra funds, you may need to turn to this type of mortgage.
5. You Want to Keep the Money in Your Savings
Home ownership involves a lot of different expenses. If someone breaks a window, if the HVAC system breaks down, or if another issue pops up, you need to be able to cover those expenses. To be on the safe side, you probably want some money in your savings account, and if you only have the closing costs, you may want to save that money and take out a mortgage with no closing costs.
At BrightPath, our mortgage lenders can help you find the right loan for your situation. To learn more, contact us today.