Paying closing costs is an expensive undertaking that can put many people off buying real estate. Especially if you are experiencing financial difficulties. Fortunately, a no closing cost mortgage in Illinois can help solve this problem. Yes, you actually won't have to pay closing costs when you take out a loan. But let's figure out how this credit option works.
How much will the closing costs for a mortgage be?
Let's start with terminology. The borrower is responsible for paying closing costs when obtaining the mortgage and title to the home. On average, closing costs are 2-5% of the loan amount. It doesn't seem like much, but with a $350,000 mortgage, the amount would be between $7,000 and $17,000. It doesn't sound very pleasant anymore, does it?
Closing costs consist of loan origination, appraisal, and title insurance fees. It's a necessary part of the mortgage process that can add stress to many borrowers — especially if money is tight. Luckily, the no closing cost mortgage program in Illinois is here to help.
What is No Closing Cost Mortgage in Illinois?
No Closing Cost Mortgage is a good choice for Illinois homeowners who want to reduce the cost of buying a home. This type of loan helps finance closing costs and makes purchasing a home easier.
There are two ways that loans without closing costs work: either the borrower finances the closing costs, or the lender will pay the closing costs in exchange for a higher interest rate.
Just take a look at some of the expenses that No Closing Cost Mortgage covers in Illinois and think how much money you'll save:
- Underwriting fee
- Processing fee
- Appraisal fee
- Escrow fee
- Credit report fee
- Recording fee
- Mortgage tax
- Lender's insurance
How does No Closing Cost Mortgage in Illinois work?
Essentially, it's pretty simple — the lender covers closing costs in exchange for a higher interest rate. For example, if you take out a loan at 3% interest, the lender may increase the interest rate to 3.5% and offer $3,500 toward closing costs. Of course, nothing is free, and you pay a higher rate to close the deal. Therefore, before you decide to take out a mortgage, it is helpful to calculate your budget and the total cost of the loan. To understand precisely what you should expect.
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Pros and Cons of No Closing Cost Mortgage in Illinois
Illinois No Closing Cost Mortgage Pros
- Your loan has no upfront costs — you won't have to pay any loan origination, appraisal, or closing fees. As a result, you can save several thousand dollars.
- No Private Mortgage Insurance — You will not have to pay for PMI that protects the lender in case of a loan default. Most often, with a down payment of less than 20%, the borrower must pay PMI — which adds several hundred dollars to your monthly payment.
- Fast approval — you get flexible terms, provide fewer documents at closing, and reduce stress when applying for a mortgage.
- A stress-free closing process — you'll have no reason to worry about where to get the cash to cover expenses. As a bonus, fewer people are involved in closing because the lender doesn't have to send someone to appraise your home.
Illinois No Closing Cost Mortgage Cons
Even No Closing Cost Mortgage can't eliminate your mortgage costs. Most often, they are built into the loan itself — so you pay interest on them for the mortgage duration. The main disadvantage of this type of loan is that it will increase the overall cost of debt. Therefore, decide wisely and carefully compare the total costs of different loans.
Apply For a No Closing Cost Mortgage in Illinois
To qualify for a no-closing-cost mortgage in Illinois, you must meet specific criteria: a high credit score, a good credit history, and stable employment. Thanks to this mortgage, you can save money on buying a home and make your dream come true.
Contact our mortgage broker if you would like more information on no closing cost mortgages in Illinois.
LBC Mortgage's no closing cost program in Illinois will not only help you reduce your mortgage costs. Still, it will also offer several other benefits, such as competitive interest rates and flexible repayment terms. Sign up for a free consultation to find out the details.