No cost out of pocket loans work very well when the interest rates on home loans and mortgage loans are declining, making the borrower anticipate a quick refinancing. In such a situation, you can use a no closing cost out of pocket loan to effectively save more cash for repairs or other uses.

Why consider opting for a ‘No cost out of pocket loan?’
Paying points is the most important consideration that gives ‘No cost out of pocket loan’ the advantage. Paying points up front to secure a low rate of interest in a steadily declining interest rate market does not make great sense because if the borrower decides to refinance shortly after a purchase, the points and costs paid up front will be a wasted expense. On the contrary, a ‘No closing cost out of pocket loan’ will not have points, and thus no deduction for that cost. Additionally, the other costs are paid for and no deduction is available.

Are there added costs involved with ‘No closing cost out of pocket loans?’
By opting for a ‘No cost out of pocket loan’, you have to pay a slightly higher rate than any home loan that does not pay all or pays at the time of closing. Hence, a no cost loan would be a better strategy if you plan to keep your loan for the next year or two. Please note that if you opt for a longer tenure, you may consider paying the costs yourself to get a lower rate. This is because lower interest rate will save you more money. For example, if you plan to keep the loan for four to five years, it should be better to pay closing costs and points to get an even lower interest rate.

Points
Points are money you pay to buy a lower interest rate. One point is equal to 1% of your loan amount.

You can include the points in your loan amount if you have enough equity in your home. However, we suggest you to consult your loan agent to determine what method is most beneficial to you.

By applying for one of our ‘No cost out of pocket loans’ all your 'non-recurring'* costs will be rebated at the time of closing.