In today’s market, just as in any other market, the buyer must pay attention to what they are being charged on their loan.  There are many lenders who offer no closing costs loans, but many of those are not as good as they sound.  The closing costs are there, you just may not be able to see them.  If you have a good loan officer, they will be honest with you and will disclose everything to you up front.  Unfortunately for those of us in this business, they are all not as conscientious as others.  For most people, it would be cheaper in the long run to pay the closing costs up front instead of having it raise your interest rate throughout the life of your loan.  This goes for all types of loans, whether it is a 30 year mortgage or an ARM, unless you are just planning on keeping the home for a couple of years. 

There are closing costs involved on every loan in the mortgage business.  Some of them are charged from the lenders and some are from a third party, such as an appraiser or a surveyor.  These charges cannot be waived, as they are home specific and apply only to your home.  So, if you hear that you are getting a no closing cost loan, be sure and check around to see what you may be able to get elsewhere.  You may be surprised and beat the interest rate on the no cost loan.

Whenever you hear that the Feds have cut interest rates, it does not always apply to direct mortgages.  There are many factors that are in play to discern what your rate will be.  Not only does it depend on what type of loan you are getting, but your credit worthiness, your stability in renting (or home ownership in the past), your employment, your reserves (or money saved), and even where you are buying play a role in your interest rate.  Right now we are actually in what is known as a “buyer’s market” because the cuts to the interest rates have managed to keep rates down for those who have good credit, but also because there is an abundance of homes on the market which has brought the selling price down.  If you are “credit challenged,” you may still qualify, but at the higher rate.  You can actually get more for your money right now, and it’s worth a chance to see if you will qualify.  With the problems in the sub prime market this year, there are quite a few more foreclosures available as well.  The changes in the mortgage industry have caused a tightening up on who they will lend money to and have put more emphasis on the buyer being able to put up their own down payment.  There are still some down payment assistance programs available, if you can qualify for them.