The concept of lending without a long list of additional fees isnt new; banks have been offering no fee home equity loans for several years. The continued boom in the national real estate market has prompted increased competition among lenders. Dropping the itemized fees from first mortgages is the latest attempt by several large banks to try to stay ahead of the competition. The fees, some of which are nothing more than added-in profit, will still exist. It just isnt possible to obtain a mortgage without a credit check or an appraisal of the property. What the no fee mortgages offer is an interest rate that is slightly higher than the standard mortgage. The fees are simply rolled into the total price, and the borrower has a much simpler set of paperwork at closing. Lenders think that by streamlining the process, overall costs can be lowered, and the savings can be passed on to the customer.

Those interested in purchasing a home with a no fee mortgage should ask around, as several large national banks are offering them now. Be aware that the name is a bit of a misnomer; hidden fee would probably be more accurate. Still, the process is simpler with a no fee mortgage, and there is definitely less sticker shock at closing time.