No cost loans mortgage doesn’t eliminate costs, they convert them from costs paid upfront to costs paid over time. Other things the same, no-cost loans usually have higher interest rates, which may be better for some borrowers, but not for others. At the same time, no-cost loans are easier to shop because of their simplicity, so the borrower may get a better deal.
Whether you are buying a new home or refinancing an existing mortgage, a No Cost loan is an excellent choice for most people. A No Cost loan program will enable you to save thousands of dollars in Points and Closing Fees.
However, when you compare the payments at the two different rates, you’ll see that the time it takes for you to recover your up front costs, it almost always makes sense to avoid the costs and take a slightly higher payment.