Obtaining loan using the equity built up on the existing home is known as home equity loan. Apart from home equity value, there are certain other factors that are considered by lenders while issuing refinance home loan including financial status of the borrower, reason for taking a loan, repayment capability, credit history and loan repayment period.
So as to attract customers, mortgage lending companies offer home equity loans structured in several attractive packages. One such package is home equity loan with no closing costs. In case of a real estate transaction, customers have to invest a significant amount towards closing costs. Closing costs include settlement costs paid to the state and federal governments and costs paid towards obtaining a mortgage. Some of these include transfer taxes, recordation taxes, health insurance, property insurance, title insurance, appraisal, inspection, loan origination and documentation fees, mortgage insurance premiums and interest prepayments.
Providing home equity loan without any closing costs is a profitable business for mortgage companies as this would fetch better revenues than a conventional one. No closing costs home equity loans are those where the lender pays closing costs on behalf of the borrower and includes them in the loan amount at a higher interest rate. Due to this, the borrower ends up paying higher amount towards mortgage loan repayment.
However, one can obtain such types of loans at feasible interest rates with a smart approach. There are several companies in the market offering such loans. One needs to shop around for online lenders offering such loans and obtain free online quotes. A basic comparison of the quotes indicates the mortgage rates offered by different companies. These quotes can be used for bargaining with the lender. Another way is to include the closing costs in the loan amount and prolong the repayment term.