Handling Closing Costs   

Closing cost payment options
Home equity loans and lines of credit often have many of the same closing costs as your original home loan.
You can handle these costs three different ways:
 Cover lender and third-party closing costs through a higher interest rate
 Bring a check to closing (just like you probably did when you purchased your home)
 Deduct the closing costs from the cash proceeds of your loan or line of credit

Which option is best for you? That depends on your goals for your home equity loan or line of credit and the
amount of cash you have available for closing costs. For a home equity loan with a fixed rate and term, all
three options require you to at least pay interest on your loan from the day you close to the date your first
payment is due.

Bringing a check to closing is a good strategy if you're borrowing a large sum, especially with a home equity
loan. For a home equity loan with a fixed rate and term, you may even want to pay points to get as low a rate
as possible — a rate you'll be happy with for years.

Covering lender and third-party closing costs through a higher interest rate is often called a "no out-of-
pocket cost" or a "no-cost" loan. The "no out-of-pocket cost" or "no closing cost" strategy makes the most
sense when you're borrowing a small amount and plan to pay it off fairly quickly. You don't commit any cash to
getting the loan and since you're paying it back quickly, the slightly higher interest rate isn't as big of a
concern as a loan you're going to have for years. And, with a home equity line of credit from us, all we require
is that you keep the minimum draw outstanding for six months and we'll waive the closing costs.

Including your closing costs in the loan/line amount makes sense if you'd rather not commit any cash out of
pocket to your loan. Amortized over the term of your loan, the closing costs increase your new loan's monthly
payment only a small amount.

What's the best way for you to handle closing costs? Ask us. We can recommend the best option for your
situation.

Anticipating loan costs
Decided a no-cost loan isn't the right option for you? Then let's look at the various fees and charges you'll
most likely need to pay before or at closing.

Lender-related costs
The cost of a loan is more than your interest rate. Prior to selecting a lender for a specific loan, you should
ask about their fees. At application, you'll get what's called a Good Faith Estimate of what the loan will cost.
And this is just what the name says. It's an estimate. And, in "good faith," it's as accurate as possible given
the information available at the start of the loan process.    

Third-party fees
Third-party fees are collected by your lender for services provided by outside parties, such as an appraiser.
All lenders require these fees and many of them are regulated by various governmental organizations

Kwik Mortgage Corporation