Mortgage Refinancing

mortgage repayments ireland

mortgage repayments ireland

If this is the case then why do we hear there are no closing costs loans? The answer is its a play on words that sneaky mortgage brokers/loan officers use to get you in the door. You think your getting a free loan because there are no “out of pocket costs.” Many mortgage brokers would sell you over the phone and not even talk about closing costs. You would say “are there any costs to do this loan?” Your broker will reply with,” absolutely zero out of pocket costs.” This of course sounds great and you move forward with them. You then get your application documents and on the Good Faith Estimate it shows a list of costs involved with the loan.You are confused and call up your mortgage person asking about the costs. They reply with “we just roll those costs into the loan so you do not pay anything up front.” This is sneaky but most people do not step back to think about this. All of the other companies you talked to were up front and told you about costs and this guy did not. You thought all of those other mortgage companies were going to make you pay out of pocket a couple thousand dollars which you really did not want to do. Maybe its time to stop the process with this loan officer and go back to the other people who were up front and honest and who could probably roll the costs into the loan like this person is doing.What the mortgage broker will do is give you their bonus money. The mortgage broker will get their mortgage rates for the day and will work the numbers around so it seems like you are getting a good deal. The broker knows they are going to get their percentage but of course wants to make more money. How they do this is by either giving you a higher interest rate or by charging you points. This is where the negotiating starts. Here is a quick scenario. Closing costs are $2k and they are still effectively going to get the $2250 when they sell the loan on the secondary market but this $2250 covers the all of the costs on the Good Faith Estimate with $250 to spare. The mortgage broker gets paid based on percentages of the loan. Usually they get 2% of the loan amount which on a $150k loan x 2% = $3000. When they sell it but at the end of the month the bonus money went to cover the costs of the loan.On your Good Faith Estimate you will see something on a line called “Lender Paid Credit ” of $2250 ( They will probably move it so its exactly $2000 because that’s all they really need to cover the costs so they at least pocket some bonus money of $250). Everybody is happy because the mortgage broker still made a sale. You, the home owner saved $2k in costs which you do not want to roll into the loan. This scenario of a no closing cost mortgage hopefully helps you out understand how mortgage companies actually do this. I know the numbers I have above don’t really make it look like a a lot of sense to to take the higher rate but I do not have a mortgage rate sheet in front of me and do not know the exact numbers. More than likely the numbers I provided are very conservative. Your costs are probably going to be in the $3 range and to take 1% higher rate will probably cover all of those costs which makes the break even point more like 5 years instead of 2.Most people don’t stay in a mortgage for more than 3 years anyways with things changing in their lives or moving, etc. So you have to work the numbers and see what your financial goals are. I hope this example of the no closing cost mortgage myth shed some light into how the mortgage game is played.

mortgage repayments ireland