In recent months, a growing number of Arizona mortgage
lenders and Arizona mortgage brokers have been advertising no cost
mortgages, in which the Arizona mortgage lender picks up the all the
extra fees and expenses that would normally be paid by the borrower.
A lot of Arizona borrowers see these Arizona no cost mortgages as a
great way to take advantage of lower interest rates while saving money
at the same time.
Arizona borrowers who get approved for these no cost mortgages have
a range of fees waived; these include legal,
appraisal and origination fees. While this may not seem like a lot of
money, on a $100,000 mortgage, these fees can cost up to $5,000. Saving
$5000 with a no cost Arizona mortgage seems like a great deal, but Arizona
lenders who offer no cost mortgages
often make up for the lost fees by charging higher interest rates.
If you do the math, you could be paying thousands of dollars more over
the life of a mortgage in exchange for paying no fees at the beginning
of your mortgage loan. For instance, many Arizona no cost mortgage lenders
add three quarters of a percentage point to their no cost mortgages.
Over the course of a 30 year mortgage you could end up paying over $20,000
more in interest.
Still, Arizona no cost mortgages could make sense for borrowers who
don't plan on staying in their Arizona
homes for over four years. Many people don’t have the luxury
of thinking beyond three years into the future financially. These people
are better off keeping more cash in their bank account and paying slightly
higher interest payments.
Arizona residents who already own a house could eliminate the fees associated
with refinancing by using an Arizona no cost mortgage. Hypothetically
you could refinance your home
every time interest rates fall no matter how small the reduction with
an Arizona no cost mortgage.