How you can avoid all closing costs when you get a mortgage.

I have to hand it to the Big 800 Pound Gorilla (aka BOFA) for making it seem as if they reinvented the wheel with their No Closing Cost Refinances. The Gorilla has a mighty big Public Relations and marketing budget, because they had every newspaper in town acting like they had come out with something new. Truth is, no closing cost refinances have been done by saavy Lenders for years. It is possible to get better advice, service, and price from the right Mortgage Broker or Banker than you will from the Gorilla - and still not pay closing costs.

A majority of the public is under the impression that you can get a better deal by going straight to a Bank, than by dealing with a Mortgage Broker or Banker. The reality is that it completely depends on the person you are dealing with. If you have the right Mortgage Broker you can get an excellent deal....even a better deal from the same bank! How could you possibly get a better deal even though you are dealing with a "Middle Man"?? Let me explain....

Unitl recently the Gorilla, like most every other bank, or mortgage company had two divisions that you can get a mortgage from. One division is their Retail side, which is who you work with when you contact the Bank Directly. The other side is their Wholesale division, which can do as much as 3 times the amount of business as the Retail division, with tremendously less overhead. Think about it - the Retail division has to pay for lots of prime commercial office space, national advertising campaigns, public relations - huge money to keep in the public eye - a huge expense per loan. The Wholesale division, on the other hand only has to let a very small target market know about their services - Mortgage Brokers and Bankers. They can have one office that covers several states or the whole country, so their cost to make loans wholesale vs. retail is substantially less! This is how you can go to a broker and get a better deal than going straight to the Gorilla - but you betta make sure you got the RIGHT broker. You know as well as I do, the wrong person (even at the right bank!) can lead you down that frustrating road to pulling your hair out and not getting what you signed up for!

Back for a moment to the issue of no closing costs. How is this possible? Most of the time people pay closing costs when they get a mortgage right? Most of the time they do indeed, there are costs that must be paid in order to have a new mortgage close. Appraisals, State Taxes, Title Insurance, etc. Many borrowers do not realize they have a choice in this matter, Most lenders (whether their representatives are aware of it or not) can deliver a no closing cost refinance to a quality borrower. When lenders and banks deliver a long term loan to a borrower and the rate is fixed, the lender earns money depending on what rate is delivered to the borrower at closing.

Lenders and banks typically have the option to raise the interest rate charged in order to receive higher compensation from the end investor in the loan - this money can be used to pay the closing costs on the borrowers behalf. In Florida, on a typical loan, you could probably accept about .5% higher in your interest rate for the option of having the lender pay all of your closing costs (even less in other states). This is an excellent strategy for people who do not plan on staying in a property for a long period of time. The other time that it can be good to take advantage of this is when interest rates are declining. If rates decline and you have not paid closing costs, then there is no reason not to refinance again for no costs (assuming you have no pre-payment penalty). People have done this multiple times over a period of months or years under the right circumstances. Amazingly, not all lenders or mortgage professionals are aware of how to do this.

We have a shoppers guide to selecting the right Mortgage Professional that every consumer should have in their hands before shopping for a loan. Most people make some crucial mistakes in the process that they could well avoid with this information.