Got a mortgage refinance quote: Too good to be true?

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One Response to “Got a mortgage refinance quote: Too good to be true?”

1. Searchlight Crusade on: 8 June 2009 at 10:11 am

   Oh, it's probably right – but the catch is that it's only the nominal rate, and your payments are only calculated AS IF that were your rate. The real rate on this loan – the rate they are really charging you, by adding the difference to your balance, will be at least 7.25%.

   This is a negative amortization loan. You might try running that term through the search engine of your choice, or if you don't want to sift through all of it, go to

   http://www.searchlightcrusade.net/posts/1126189276.shtml

   and

   http://www.searchlightcrusade.net/posts/1150813093.shtml

   and

   http://www.searchlightcrusade.net/posts/1151101964.shtml

   and

   http://www.searchlightcrusade.net/posts/1155049674.shtml

   For all kinds of excellent information on the problems with this type of loan.

   Businessweek also (finally!) did an article on them here
   http://www.businessweek.com/magazine/content/06_37/b4000001.htm?chan=top+news_top+news+index_top+tale

   But if you afford a real loan, they are available in the high 5 percent range. 30 year fixeds from about 5.875. And if you cannot afford a real loan, chances are pretty high that you either should not buy or should sell if you already have.