Introducing the 0.25% Mortgage Loan

14 Responses

Comments

1. jim September 5th, 2006 at 11:56 pm 1

   sounds like a way for a company that is crooked to continue to fleece the state of california with promises of rates and payments that just aren’t true…

2. Joshua Dorkin September 6th, 2006 at 7:13 am 2

   Interesing comments, Jim. Is there something that you know that we don’t? Please let us know more. Thanks.

3. jim September 11th, 2006 at 4:18 pm 3

   a .25% start rate vs a 1.25% brings your payment on a $200,000 mortgage to $666.50 vs $576.71 - this means you will defer more interest to the back end of the loan…my guess is that they are selling the payment only and i doubt they are even explaining the function of an option arm or the pitfalls if one uses only the minimum payment as a solution to a cash-flow problem. it is a powerful loan and can do great things if used and sold correctly. however, moving a start rate (usually only applicable to the first month in regards to how it affects your deferred amount) lower, indicates they are trying to grab people that are only concerned with payments. those are the people that are in over their heads and will not take those payment savings and invest or purchase other assets, but they will use that money for depreciating assets (cars, clothes, trips). when they hit the recast period and have not improved their situation, they will be forced to pay the adjustable payment (ammortizing 30 year - variable too!) and they will have not increased their disposable income, saved any money and in a cool market - they will have not gained anymore equity. a lot of companies are slinging these loans with only the thought of closing deals and not educating their clients. this is the best loan available today - however, many are selling this under another premise….

4. Joshua Dorkin September 11th, 2006 at 8:55 pm 4

   I agree with your completely. Great analysis of the situation.

5. Daniel Redman October 13th, 2006 at 12:33 pm 5

   Jim,

   You are exactly right. This loan could be dangerous for someone that isn’t properly educated and doesn’t intend to use this loan for cashflow investment purposes. The issue with the concern that you have raised is that it is very very difficult to qualify for the .25% loan. You must have immaculate credit and a further impressive LTV and DTI. So, simply in the model of this program, most of the wrong people wouldn’t even qualify.

   As you’ve also said; this loan should not be sold by a company that doesn’t have the infrastructure and know-how to use the cash savings that is created. We have 5 departments: Mortgage, Financial Services, Mexico, Commercial, Real Estate all with the same goal in mind. We show our customers how to use the additional cash flow to create a whirlwind of leverage, otherwise known as the Velocity of Money. The .25% loan is only one piece of the puzzle.

6. Erin December 7th, 2006 at 10:08 am 6

   Does anyone know if this is their own securitized product, or if there are investors buying it? If so, who?

7. UK mortgage guy May 30th, 2007 at 8:59 am 7

   It never ceases to amaze me how everything is so much cheaper in the USA than it is in the UK. We have got used to all sorts of consumer products being around 50% cheaper across there but did not realise until reading this post that you guys have incredible deals on mortgages too! Wish I could move to America!

8. JJ Martin June 29th, 2007 at 8:38 am 8

   It never ceases to amaze me how everything is so much cheaper in the USA than it is in the UK. We have got used to all sorts of consumer products being around 50% cheaper across there but did not realise until reading this post that you guys have incredible deals on mortgages too! Wish I could move to America!

9. Ed Lathrop July 3rd, 2007 at 1:04 pm 9

   Now is really not the time to go into A Negative Amortization Mortgage. Find out what the monthly payment would be after the Negam portion of the mortgage expires and make sure you can pay it. Negams are what foreclosures are made of.

10. Credit Consumer Counseling July 12th, 2007 at 4:40 am 10

    Beware of scams. The general rule is to pay a shorter term to reduce interest you need to pay.

11. Loan Seeker July 19th, 2007 at 2:33 pm 11

    What is the old adage? If a deal seems to good to be true… it probably is. We do not have this type of loan in the UK but we have had similar schemes that appear to be great on the surface, but can have a very nasty sting in the tail.

12. Mortgageman July 27th, 2007 at 8:35 am 12

    ¿too good to be true? Interesting anyway,

    Thanks for the info

13. Jason M Fox October 2nd, 2007 at 4:22 pm 13

    Another GREAT product for the well informed and the DEVIL for a borrower that gets in over their head!

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