They can not be used as part of the down payment on the loan. Any loans which are advertised as having "no closing expenses" usually have actually unfavorable points embedded in them where the cost of coming from the loan is paid through a greater interest rate on the loan. This charge should be disclosed on your Loan Price Quote (LE) and Closing Disclosure (CD).

When you acquire unfavorable points the bank is wagering you are most likely to pay the higher rate of interest for a prolonged duration of time. If you pay the greater interest rate throughout of the loan then the bank gets the winning end of the offer. Lots of people still take the deal however due to the fact that we tend to discount the future & over-value a swelling amount in the present.

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