DEFINITION of 'No-Fee Mortgage'
A mortgage in which a mortgagee does not charge the mortgagor any fees for the applications, appraisals, underwriting, processing, private mortgage insurance and other third-party closing costs typically associated with mortgages. The total cost savings associated with the lack of fees is typically 3-5%
BREAKING DOWN 'No-Fee Mortgage'
People seeking no-fee mortgages should be diligent when coming upon an offer for a no-fee mortgage, as many mortgagees tack origination and/or closing fees onto the mortgage's interest rate.
Home buyers definitely gain from the prospect of free private mortgage insurance and other cost savings. The financial institutions that offer no-fee mortgages also reap benefits, because the amount of revenue lost in mortgage fees can be recovered when mortgage holders also sign up for bank accounts, credit cards and other higher margin services.