The price of a “no-cost” loan......

The New York Times

Some home buyers who may be concerned about paying high closing costs might be tempted by a “zero-cost” or “no-cost” loan option, which requires no cash outlay, but typically adds a half percentage point to the rate. However, some financial consultants say these loans tend to be most beneficial to buyers planning to have the loan for less than five years.
KEEP THIS IN MIND
• One of the primary differences between a no-cost loan and similar loans is that no-cost loans do not tack on closing costs to the balance, but instead increase the rate.
• With no-cost loans, third-party fees including the appraisal, credit report, title insurance, recording, and the use of a mortgage broker are paid by the lender. The fees, including the amount the broker is being paid, are disclosed on the closing statement.
• Home buyers who bypass a broker and work directly with a lender may encounter less transparency, as loan officers are not required to disclose the amount the bank is making on the loan.
• Borrowers weighing their loan options are advised to use a mortgage amortization calculator to compare the costs for a conventional loan compared with a no-cost loan. The Federal Reserve provides an amortization calculator on its Web site at www.federalreserve.gov.
Read the full story:
http://www.nytimes.com/2010/10/24/realestate/24mort.html?ref=realestate
Oct.

The Bail Out

If this bail out package passes will it be enough? I don't think it is going to help the guy set up to lose his house next month only the banks can do that. Why can't the banks just stop foreclosing on people that took and have been paying on that interest only for three years mortgage that is about to turn into some other monster. Extend the mortgage they can afford instead of upping the interest rate to 9% and forcing people out of their homes. Who is helping that guy?