Should You Get a No-Fee Loan?
“No-cost” and “no-fee” loans: you likely see promotions for them all around. Are these loans the real deal, and should you consider one if you’re looking to buy a house or refinance?
The answer is not such a simple one. While there are loans that technically offer no upfront fees, these loans are often misrepresented, and banking regulators have gone after lenders who misrepresent these loans.
While they may sound great at first, the reality is that no-cost and no-fee loans may actually cost the borrower more over the long term because costs are often hidden by rolling them into the new loan through higher principal or interest.
The rates on no-cost loans are usually about 1/2 or 5/8 of a percentage point higher than the…
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