www.MortgageLoanRequest.com, Dreamy Mortgage Interest Rates May Conceal Nightmares
Offered a super low interest rate? If it's too good to be true, it is.
(PRWEB) June 14, 2005 -- We all have gotten them, we all read them, and then
most of us delete or ignore them. Low interest rate offers that seem too good to
be true are careening about the Internet at break neck speed and some folks are
becoming the victims of hit and run.
Since the advent of the Internet
many wonderful things are now available to consumers, which were not available
just a few short years ago. The Home Mortgage and Lending Industry has fully
embraced the Internet and is booming as a result. More times than not consumers
benefit form this new alliance, but at times they are blinded by the offers,
succumb to their own naiveté and get taken to the proverbial
cleaners.
E-mails that purport to offer home owners rates as low as 1.5
percent, or claim that they have already been pre-approved for a re-financing up
to $400,000 or more, are designed to hit consumers where they are most
susceptible, their wallet. Like magicians who use smoke and mirrors, these
unscrupulous mortgage brokers are hoping that the show will be so amazing, that
the fine print will not be seen or understood. Many times this tactic works and
people find that what they had hoped to save has all but been lost, along with
the home they have worked so hard to acquire.
The fact that current news
headlines are reporting daily declines in legitimate interest rates further
helps to reinforce in the minds of consumers, that these offers are legitimate
and warrant consideration. What the fine print conceals, the slight of hand, is
that the low rate is actually adjustable and it can increase in as little as 30
days time. You may be paying less every month, but your interest is not being
paid up and your loan balance continues to accumulate at an alarming
rate.
Homeowners who think that they may be saving $200 to $300 a month
on their payments are actually falling behind by that very same amount. The
reason being, no matter what that new rate quoted may have been, they are still
paying the original 5, 6 or 7 percent that is associated with the original loan
agreement. Further, lenders work on a margin basis and that margin is tacked
onto the LIBOR index rate. The new loan has no annual cap and it can continue to
rise to the point where the borrower is now looking at a principal balance well
over 100 percent of the original. Also within the fine print of the new
agreement, is the lender's right to increase, at any time, the monthly payment
due. This means that not only has the balance increased, so have the monthly
payments. To add insult to injury, these stipulations can remain in effect for
up to two or three years in some cases, and the closing costs associated with
these loans are in the thousands rather than hundreds of dollars.
These
types of offers should not catch out borrowers. Anytime they receive this type
of pitch they need to ask how and why they are being approached. Reputable
lenders do not employ such tactics. They will not "spam" or go door-to-door
hanging flyers on people's doors. They will not offer anything that seems too
good to be true. Sales people and brokers who wish to get into a direct
one-on-one with prospective borrowers are going to be relying on their expertise
as salespeople, and not on a straight-forward deal to get people to sign new
loan agreements. They know that a lot of folks just cannot say no to a "kind and
helpful" offer.
Only a limited number of states have laws and
regulations in effect to protect borrowers. It is advised that anyone who thinks
they are about to get the deal of the century seek professional, third party,
financial counseling. They should take the proposed agreement and a list of
questions with them, and thoroughly examine the offer in an un-pressurized
setting. They need to clarify exactly what the terms are, how they may adjust
over time and what index and rate they are pegged to. Is negative amortization
possible? Will they suffer a pre-payment penalty if they try to get out of the
agreement early? And most importantly, what is the actual rate of interest going
to be?
For more information on interest rates and home loans, visit www.mortgageloanrequest.com.
Contact:
David
Levine
888-450-2837
e-mail protected from spam bots
# # #
Source : http://www.prweb.com/releases/2005/6/prweb250617.htm