You know those refinance mailers you get at home?

Open this link and then read below  Lender 1 solicitation

As a person who provides morgage loans to a lot of clients, I take great interest in the offerings other mortgage companies send in the mail.  I get 5 to 7 solicitations per week in my own mailbox and I review these closely to find the hidden traps.  Here’s just one example from a lender.  I blacked out their name because it isn’t relevant to the point I am making.  Let’s look closely at what is going on here.

On first glance, the very low rate of 4.625% for 30 years jumps right off of the page.  So are they offering a 30 year fixed rate at 4.625%?  Nope.  The fine print tells you this rate is for 6 months.  After 6 months, your rate will increase but this doesn’t tell us how much.  They can increase the payment 1% every 6 months so in 1 year, you could be paying at 6.625%.  Still, we don’t know the real interest rate.  We don’t know how many points they are charging either for this loan.

What about that promise to make no payment until May 1.  You might think that you get a month of free interest, right? Wrong.    Since interest is paid in arrears, your May 1 payment pays your April interest and you will be charged in escrow for every day in March you have the new loan.

There are other catches in this mailing, call me if you are getting these and you want to know what is really going on.  The bottom line is that they are trolling for the uneducated or for people who are too busy to do the necessary research to uncover the facts.  Buyer beware.