Why you need a NO CLOSING COST loan option when buying a home

Dana Anghel By January 25th, 2024 January 25th, 2024 No Comments

If you’re already in the market to buy a home in Utah, you’ll nod and agree as you read.

If you haven’t looked at homes yet or made any offers, then you’ll want to pay attention. It will help you transition more quickly from anger and frustration to acceptance and being proactive.

Utah is currently a seller’s market. I don’t normally see or experience the home buying process beyond the loan paperwork – but even I am feeling this one.

A seller’s market means that inventory is low and potential buyers are arm wrestling each other over who gets to buy the home.

Ok, maybe not that extreme.

But multiple offers on a home give the listing agent the opportunity to trigger a bid war, asking for the “highest and best” offer. This drives the home prices up and causes a lot of frustration among buyers that make offer after offer just to be turned down.

The ones that do get their offer accepted often experience buyer’s remorse. After the initial rush of excitement, they feel they got tricked into offering a higher price.

Sellers and listing agents have a few different ways of handling a multi offer situation.

 They can choose a particular offer over others without triggering a bid war, or they can ask for “highest and best” by a certain time and date. Again, “highest and best” does not mean that the seller has to go for the most money.

  • They can choose the offer of a nice family that submits a good personal cover letter with their offer.
  • They can choose an offer that has shorter deadlines and isn’t contingent  on selling another property first


  • They can choose the offer that has a large down payment, therefore better odds of not falling through due to some financial reason.

Unfortunately, I think a lot of sellers just want to make as much money as possible. And it is coming back to haunt them.

I currently have 3 borrowers that have continued to shop around while under contract for a specific home. They have all canceled their initial contracts under the due diligence deadline (keeping their earnest money), and have other properties that they will be purchasing. It is what inevitably happens in a market like ours. And some sellers that are purposely turning the process into a buyer “bloodbath” will have wasted lots of precious time with the wrong buyers.

Leaving aside the part where people change their minds, what my borrowers have in common is their ability to make purchase offers without asking for closing costs.

This is an important factor in getting an offer approved. You may feel generous with a bid of $3,000 over the asking price, but if you want $4,000 back in closing costs (plus a home warranty of $500 and maybe $1,000 in potential required FHA repairs), you’re cutting into the seller’s bottom line.

Having seller paid closing costs is great, and can help you get a lower interest rate. But it’s not necessarily an option in every type of market, especially one with fierce competition.

The solution I offer: choose a slightly higher interest rate, and increase your chances of getting that dream home.

As an example (and don’t take this as a rate quote, but a rough approximation of what is now available), on a $200,000 home, 30 year fixed rate term FHA loan, the difference would be something like this:

3.25% interest = $870.41/month Principal and Interest payment

3.625% interest = 912.10/month in Principal and Interest payment.

The monthly difference in your mortgage payment would be $41.69. The closing costs covered by the higher interest rate are worth about $4,000 (8 years to pay off that amount at the $41/month rate).

Yes, you’re paying a bit more on your mortgage, but you only need to bring your down payment to closing AND you will have a closing to go to because your offer got accepted!

The decision is yours, but know that you have this option. As a broker, not only do I shop around for lenders that will give you the best interest rates, but I will also give you the option of which interest rate to go with.

Local banks and credit unions will quote you a certain rate and certain closing costs – take it or leave it. This may go unnoticed if you’re doing a cash-out refinance, but what if it prevents you from buying a home..?

If you feel like you need an edge in Utah’s current purchase market, please contact me for a no-closing costs loan quote. FHA, VA, USDA or Conventional loans – I have experience with all of them, and I look forward to making your home buying process easier.

Apply online now to get things started on a no-cost mortgage loan.

And if you’re frustrated with how hard it is to find a good home… hang in there. You’re not alone.