The Real Deal!

I'm tired of the one size fits all loans that some lenders promote and the 'get rich quick' schemes being promoted by so many of the real estate guru's on the speaking circuit today. We need to get back to the real deal. Real real estate investing, real lending, teaching people how to build a real real estate business!

Today I'm fighting the so-called No Closing Cost Loan. A regional player in the Atlanta Mortgage Banking industry promotes this type of loan as the biggest no brainer in the history of man. The no brainer is accepting one of these loans blindly! I first would ask any sane person considering a No Closing Cost mortgage one simple question. What have you ever heard of that a bank 'gave' you that was free? Anything? Anyone? If your like me, about the only thing you can think of is that little nickel sucker wrapped in plastic and melting in the fish bowl on the counter where you just deposited your hard earned money.

Time for THE REAL DEAL.....the lender is raising your rate to cover the closing cost! The loan is not really free. Sure, the loan is good for a select few individuals. Those people that are going to be in their home for a short period of time, say three years or less, should look into this type of loan. But, those people in their homes for a longer period of time should really do the math. Here's a quick calculation for you. Lets say the payment on a loan where the closing costs are rolled into the loan gets you a lower rate and thereby a lower payment, and let's say that payment is $100 less than a payment on a no closing cost loan. If you are in your home for 10 years this so-called no closing cost loan would cost you $12,000. Now if the loan with the lower payment and closing cost rolled in (by the way - that means only a slightly higher loan amount and no out of pocket expense) costs you say $4,000, you've actually overpaid by $8,000.

So why do these sharks promote this 'one-size-fits-all' loan? Because the mortgage broker or banker makes more money on this type of loan and hides from the borrower what they are really profiting. Again I must ask, what banker have you ever known to give away anything of value for free? The next time anybody considers taking out a loan on real estate, they should think of the mortgage as a financial tool and consult a lending professional that understands the value of using the right loan that fits an individuals investing and retirement plans. And that's the Real Deal thought for today!