The no-cost financing option is a good option for homeowners. Why? I’ll get to that at a later stage. Let me discuss some facts so that one can understand that free financing is a reality, not a myth.
How do you get away with no cost financing? It’s a pretty simple fact that you have to pay for what you get. No one is willing to dole out money just for the heck of it.
If you need money, you have to pay for it, but “no-cost financing” options are financing options that have no hidden fees and are fairly smooth. A financier who is going to give you a free financing option will charge you between 0.5% and 0.85% more than one who is going to give you a loan at full cost.
The above advantage that I have given is for homeowners. As a homeowner, one can opt for a no-cost mortgage option as long as the interest rates are significantly lower. This is the advantage if current interest rates are lower.
Homeowners who plan to live in their homes for a short period of time, say three to a year, can take advantage of this loan option. If you are unsure about how long you will stay in your home, then you should consider refinancing, keeping in mind that you may still be eligible for no-cost financing.
Once you get financing at no cost, you should be ready for little surprises. Once you’ve opted to refinance, you won’t have to pay any lender fees or actually pay settlement fees. As borrowers of the loan, you will be responsible for daily interest and other escrow costs. However, your old lender will credit escrow costs when your old loan closes.
Before you opt for a no-cost financing option, it’s a good idea to talk to your financial advisor. There were two types of financial advisors until now, an independent financial advisor and a tied agent.
An independent financial advisor will do all the dirty work for you, like browsing the entire market and figuring out what’s right for you. A tied agent will talk to you only about what your employer has to give you.
Now the third type of financial advisor that has emerged is the multi-tied broker. They have their own boundaries to speak of from a selection of companies and how they do business with them. Basically, they were arranged for people who would have otherwise been tied to tie tips.
These financial advisors, when giving you advice on any option at no cost, will charge you for their advice. This will relate to your total cost loan. You can always make an agreement with them to give you the best in this area. You can find advisers related to specialized field such as mortgages to give you specific advice on financing at no cost.