Stated correctly, there is no such thing as a FREE loan but there are NO COST loans.
A no cost loan has no hidden costs, there is nothing added to the loan balance. All 3rd party costs are covered by a credit from the lender and it’s that simple. It’s not a trick and it’s not a gimmick.
It’s 100% inaccurate to say that there is no such thing as a no cost loan
Strict Regulations require that mortgage brokers show all cost/fees AND the credit from the lender that covers them.
(A bank or direct lender does not have to show these figures)
Could you get an even lower rate by paying something up front or adding to your loan balance?
YES, but it often has a 5 to 10 year payback period and up to the borrower to decide if it’s worth it. That’s a different discussion than whether no cost loans exist & it doesn’t require a spreadsheet or Finance 101 skills to understand a no cost loan.
Also, a no cost loan at a lower rate is NOT a no brainer without understanding your payback terms.
It can end up costing you more even at a lower interest rate!
One needs to fully understand how they are benefitting from the refi.
You just need an explanation that allows you to understand the benefits.
