Looking for an adjustable rate mortgage

Dear RomanS, We were looking for an adjustable rate mortgage, and a bank near our home told us that these loans always come with closing costs. Our friends refinanced into a five year fixed a year ago and said they didn't need to pay closing costs. The mortgage company they went to moved somewhere (or disappeared). We wanted to ask before going to other banks if adjustable rate loans can be done with no closing costs or not, so we have move information when we talk to them.

Sicerely, Nataly L, CA

No closing costs option is easily available on adjustable rate loans, it's just that the particular bank you went to probably didn't have the right program. Try to go to a mortgage company, they work with many lenders and are better positioned to provide what you're looking for. Unless your loan is small, you should be able to find it in your area - I don't think CA is any different then Massachusetts. Small loans are harder to do with no closing costs - and the rate bump is significant, while on larger mortgages closing costs can be covered at 0.125-0.375 increase to rate.

Roman Shulman, http://www.CapitalFinanceWeb.com

Sorry for the silly question. :) Wouldn't banks be able to offer better rates - doesn't a mortgage company introduce an overhead?

The overhead is always there, bank or not. The lender who provides the funds can't arrange loans (it's a bit of work). So they turn to mortgage companies. When you go to a bank, same thing - the person you're talking to is a loan officer, not a lender. Loan officers get paid by the lender for arranging the loan, wheather it is done at a bank or at a mortgage company. A bank can offer only its own products, while a mortgage co will offer products of many lenders, best ones will typically be better than of any one local bank. At least I hope this is the case :)

Roman Shulman, http://www.CapitalFinanceWeb.com