Lenders roll out no-cost-mortgage deals

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(This is Part 3 of a three-part series. See Part 1: Who should use no-cost mortgages? and Part 2: Why select a no-cost mortgage?) A no-cost mortgage is one where the lender charges a higher interest rate in exchange for paying most of the borrower's settlement costs. No-cost mortgages in refinancing: In last week's column I explained that no-cost mortgages are a good deal for refinancing borrowers who don't expect to have their mortgage very long, and therefore won't be paying the higher rate very long. No-cost mortgages can also protect refinancing borrowers against being overcharged at the settlement table because the lender committing to no-cost at the outset has no opportunity to raise costs later in the process. No-cost loans used to refinance are widely available because most lenders are prepared to assume full responsibility for settlement costs. Most of the settlement costs on a refinance are lender fees, and the third-party services that generate charges (such as appraisa...