Finance
Oklahoma lenders who offer 'no-closing-cost' mortgages typically recoup those costs by:
AAdding the costs to the loan balance (financed closing costs) or charging a higher interest rate (lender credit)✓ Correct
BCharging the seller higher transaction fees
CReducing the borrower's down payment requirement
DNot making a profit on the loan
Explanation
In no-closing-cost mortgages, the lender covers upfront fees either by adding them to the loan balance (increasing the loan amount) or by charging a slightly higher interest rate, with the additional interest or balance offsetting the waived fees.
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Key Terms to Know
Closing Costs
Fees and expenses paid by the buyer and/or seller at the closing of a real estate transaction, in addition to the property's purchase price.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Pre-ApprovalA lender's conditional commitment to loan a specific amount to a borrower, based on verified income, credit, and assets.
Math Concepts
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