Florida Mortgage Lenders: No Closing Costs (Maybe)!

More Florida mortgage lenders, buoyed by near historically low rates, are now dangling no-closing-cost deals to spark cooling home sales.

The practice, which seems to be picking up steam in the Sunshine State and nationally, particularly helps lure buyers who have little cash.

But other home loan providers call it a gimmick that will end up costing homeowners more in the long run in the form of higher Florida mortgage rates.

Some say a no-closing costs deal could make sense for buyers who plan to keep the house for only a short time, but aside from that, it may not be best.

“There is no such thing as a free lunch,” one Florida mortgage broker said.

“The interest rate is going to go up. So, it should always be looked at case by case. In some cases, it makes sense to pay the closing costs because it will mean a lower rate for the duration of the loan.”

Bank of America is now advertising what it calls no-closing-cost Florida mortgages, but at a slightly higher rates than conventional mortgages.

“It is a wonderful product. It’s a deal maker,” said Larry Parrish, a consumer marketing executive with the Charlotte, N.C., banking giant.

But it might not be for all Florida home loan seekers.

“First-home buyers are doing maximum loans,” another lender said. “Savings is a lost art. And most people don’t understand what the costs are.”

Neither Parrish nor Bank of America spokesman Ernesto C. Anguilla would say if the bank’s rates increase with no-closing-cost mortgages.

Florida mortgage lender pitches for no-closing-cost mortgages vary.

One institution claims to have “simplified the entire loan process by eliminating points and closing costs on most Florida refinance and home purchase loans, so you know exactly what you’re paying for without any confusion or guesswork.”

Tim Maitski, an analyst with ReMax in Atlanta, warned in his advice column:

“Don’t get fooled about someone offering no closing costs. There is no such thing as a free lunch. Banks have employees that must get paid. There are definitely costs involved in loan origination.”

“They either can be itemized so you know exactly what you are being charged for or they can be hidden by being incorporated into the rate or points. You might get ‘no closing costs’ but you’ll be paying a higher interest rate or more points.”

Although average Florida mortgage costs have risen slightly since January, they are still near the lowest in the 36 years of the Federal Home Loan Mortgage Corp.’s weekly primary mortgage market survey.

A 30-year fixed-rate Florida home loan in April, for example, averaged 6.18 percent with 0.5 points, according to a Freddie Mac survey.

In December, it averaged 6.14 percent with 0.4 points. The average has held at about 6 percent since its lowest point of 5.45 percent in March 2004.