Second Mortgage

The interest in flat fee mortgages is growing every by leaps and bounds as Washington DC has began to focus on the abuses in the mortgage industry.

So remember, when you apply for a mortgage you should receive a written “Good Faith Estimate” within three days. There are usually many different fees listed on the good faith estimate. If the good faith estimate is missing a bunch of these fees there is a good chance it is a “lowball” offer that has artificially lowered closing costs by ignoring them.

Mortgage closing costs can include title insurance, escrow fees, lender fees, taxes, broker fees, processing fees, hazard insurance, appraisal fee, and many other types of costs.This is because a typical refinance or purchase requires the work of many different parties.

Moreover, some lenders offer the borrower to have a “no closing cost” or “flat fee” closing cost. Instead of paying all of these closing costs, the borrower usually accepts a higher interest rate instead. This type of loan option also often comes with a prepayment penalty that may last several years.

You aren’t really minimizing your costs. You are simply rolling them into your loan in the form of a higher monthly payment. For a borrower who intends to keep their loan for a long time it may make sense to pay closing costs up front to get a lower interest rate and lower monthly payment. This may end up saving money in the long term.

For borrowers who do not plan on keeping the property for very long it may make sense to go for a no closing cost of flat fee option.