Crazy Mortgage Offerings In The Mail

Here I am, sitting pretty with a 5.75% fixed rate 30 year mortgage.  Sure, I could have gotten a little better rate when the mortgage rates were at their bottom, but I didn’t.  Overall, I’m not complaining about the rate I’ve got.  At least it’s a reasonable rate and it’s fixed.  I don’t have to worry about rate adjustments every 6 months, or payments that balloon out of control.  Needless to say, the whole thing just gives me a certain peace of mind.

I wish that I could send out a letter to all the sleazy mortgage loan companies out there to let them know that I’m very happy with my current loan and would not even consider taking a new loan with them.  At this point, they aren’t going to beat the rate that I have and even if they could, I really don’t want to stretch my loan out another 30 years.  The only time I’d even consider refinancing is if rates got low enough to get me a 15 year fixed loan for approximately the same payment that I have now.  That’s not going to happen.

At first I used to chuckle at the ridiculous mortgage loan letters that I would receive: “0% interest for 3 months, and then your interest rate will go up to 9.9% and adjust from there every 6 months”.  Yeah, I made that up, but I’m sure someone got a letter with those terms in it.  Now, when I receive these offers, it kind of makes me a little mad.  Millions of families are in crisis because of the ridiculous loans they either ignorantly signed up for, or were led to believe had better terms than they really did.  Tons of people are losing their homes in this mortgage meltdown but the letters haven’t let up yet.

I just received a letter in the mail.  The good news is that this sleazy mortgage company has done some analysis on my loan and they have discovered I qualify for a 1% loan.  It is great news indeed.  I can free up money for new cars, vacations, remodel my house or even use the extra money to pay off a bankruptcy.  It seriously says that if I take their loan, I would have more money to pay off a bankruptcy.  Oh, and by taking out a new loan I wouldn’t even have a payment for 30-60 days.  That’s more money, that I could use however I please.

Now the fine print: “The initial rate and APR are variable rates which may increase after closing, and are available on a 40 year first trust deed/mortgage loan to purchase or refinance of owner occupied, single family residence, condominiums, townhouses, and PUD’s only.  Rates and APR are set for five years only.  After the first five years, rate and fully amortized payment are based on a 12 month MTA index plus a margin 2.75.  Lifetime interest rate cap is 9.95%.  The initial payment is based on a fixed payment option for the first 60 months.  Payment referenced is a minimum payment option which may result in deferred interest.  80% loan to appraised value may be required.  Prepayment penalty will be required.”

HOLY CRAP.  No wonder people are getting in trouble in this country.  They get teased in with a 1% offer and don’t read or at least understand the fine print.  The person that signs up for this loan is taking out a 40 YEAR loan, may find their rate increases after closing, will most likely face up to a 9.95% interest rate over the life of the loan, and even the 1% isn’t true because the fine print says that they may just be deferring the interest, not avoiding it.  Notice that they want an 80% LTV ratio, which means that you can’t borrow more than 80% of the value of the house.  Yeah, smart thinking Mr. Dirty Mortgage Man.  You better cover your butt because even I’d probably end up defaulting on this loan and I make a good living and have good credit.  And did you see the part about prepayment penalties?  Sleazy, really sleazy.