Zero Closing Costs
Zero closing costs refers to having little or no closing costs as part of a real estate transaction. A zero closing cost mortgage is a type of mortgage where the lender covers the closing costs associated with the loan, rather than the borrower. Certain line items such as down payment are costs that must be paid during closing but are not necessarily considered "closing costs." Closing costs are the fees and expenses associated with obtaining a mortgage, such as title insurance, appraisal fees, and loan origination fees. Zero closing cost mortgages are advantageous if you may move before the full term of the mortgage loan (e.g. 30 years for a conventional 30-year mortgage) or if you want additional flexibility to refinance in the future.
Since not all closing costs are reflected in the lender's APR, APR does not reflect the true savings of a zero closing cost lender. APR is rate that encapsulates the interest rate and lender fees to help the borrower see hidden fees that may be involved. However, a true zero closing cost lender will have more fees waived than just lender fees, so it is important to get a comprehensive estimate that involve non-lender fees and compare all fees that are involved in closing for a better comparison.