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The inside scoop from Ben Lucero at Indigo Mortgage: I was listening to a radio ad the other day and the lender was saying that they offer a “no closing cost mortgage”, that the lender would pay all the closing costs for the borrower.
This is actually a scam. I say that because I had a college professor in my economics class who emphasized that there is nothing “free” — ever. There’s always a catch.
In this case, the mortgage lender can only afford to pay for your closing costs if they raise the mortgage interest rate. By raising the interest rate, the lender makes many more thousands of dollars over the life of the loan. That means the borrower is paying more, every single month for 30 years, than they needed to.
So when a mortgage lender say they’ll pay your closing costs, what they are really saying is they are happy to pay those closing costs because they will charge you a higher rate than if you paid them yourself. When you compare the interest rate on one of these “no closing cost mortgages”, you will always find your projected monthly payment will be lower by paying the closing costs yourself. If you pick the higher rate and don’t pay those fees at closing, you will exponentially pay more over the life of that mortgage.
Don’t trust these out of state lenders and their “too good to be true” offers. Shop your mortgage locally and be sure to include a trusted local mortgage company like Indigo Mortgage, as we always give you an honest and ethical deal up front.

Scam Mortgage Offers Beware of Predatory National Lenders