How does a No Cost Loan Work?

Helping our Veterans navigate the world of FREE loans, NO COST loans and NO POINT loans..

There is no such thing as a FREE LUNCH• What does that saying mean?

• Is anything really free?

• Lets discuss FREE loans, No Cost Loans and No Point loans and determine what is really being said.

Have you ever been offered a Free Loan?

• To me a Free Loan means not one penny is being added to my balance or if I am buying a home my loan amt is for the exact same as my purchase price.

• This very rarely ever happens

• We will discuss in upcoming slides how to determine if you are getting a truly FREE Loan.

What is a NO COST loan? (no closing costs)

• No closing costs loans still have fees or money needed to get them closed.

• Must understand the difference between closing costs and prepaid items.

• Many lenders will suggest a No Cost loan (no closing costs) but this does NOT mean that other “fees” or “prepaid items” wont be needed or added to your new loan.

You need to understand the difference between closing costs and prepaid items

• What are closing costs?

• What are prepaid Items?

• If offered a NO cost loan you need to ask if that means no closing costs and no prepaids or just no closing costs?

What does No Points or no Discount Fees mean?

• What are discount points or points?

• Understand how a bank/lender makes money?

• Most loans offered for free or no cost end up ultimately being nothing more than a NO POINTS loan. Make sure you understand the Good Faith Estimate.

How to read a Good Faith Estimate or GFE

• What are discount points or points?

• Understand how a bank/lender makes money?

• Most loans offered for free or no cost end up ultimately being nothing more than a NO POINTS loan. Make sure you understand the Good Faith Estimate.

Lets look at 3 GFE’s together

NO COST, FREE LOAN

NO COST

Most Loans Cost with Points

– Eric Kandell, President of Low VA Rates.

“As our name implies, we have the LOWEST rates around for VA loans and we will pay you $250 if we cannot get you the lowest rate/fees

(APR) out there.”