Mortgages & Creative Financing

Introducing the 0.25% Mortgage Loan

Expertise: Real Estate Marketing, Personal Development, Real Estate News & Commentary, Mortgages & Creative Financing, Real Estate Investing Basics, Landlording & Rental Properties, Flipping Houses, Personal Finance, Business Management
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LEI Financial, a mortgage lender in California and Arizona is launching a new mortgage program that is unlike anything I’ve heard of, offering 0.25% Interest Rates. According to LEI, “This loan gives the borrower a fixed interest rate of .25% for the first five years. The borrower pays the interest only for their monthly minimum [...] View the full article: Introducing the 0.25% Mortgage Loan on The BiggerPockets Blog. This content is Copyright © 2017 BiggerPockets, Inc. All Rights Reserved.

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Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of
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    jim
    Replied over 13 years ago
    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…
    Joshua Dorkin
    Replied over 13 years ago
    Interesing comments, Jim. Is there something that you know that we don’t? Please let us know more. Thanks.
    Joshua Dorkin
    Replied over 13 years ago
    Interesing comments, Jim. Is there something that you know that we don’t? Please let us know more. Thanks.
    Joshua Dorkin
    Replied over 13 years ago
    Interesing comments, Jim. Is there something that you know that we don’t? Please let us know more. Thanks.
    jim
    Replied over 13 years ago
    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….
    Joshua Dorkin
    Replied over 13 years ago
    I agree with your completely. Great analysis of the situation.
    Daniel Redman
    Replied over 13 years ago
    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.
    Erin
    Replied over 13 years ago
    Does anyone know if this is their own securitized product, or if there are investors buying it? If so, who?
    Adam
    Replied almost 13 years ago
    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!
    Ed Lathrop
    Replied over 12 years ago
    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.
    Credit Consumer Counseling
    Replied over 12 years ago
    Beware of scams. The general rule is to pay a shorter term to reduce interest you need to pay. Reply Report comment
    Credit Consumer Counseling
    Replied over 12 years ago
    Beware of scams. The general rule is to pay a shorter term to reduce interest you need to pay.
    Mortgageman
    Replied over 12 years ago
    ¿too good to be true? Interesting anyway, Thanks for the info
    Mortgageman
    Replied over 12 years ago
    ¿too good to be true? Interesting anyway, Thanks for the info
    Jason M Fox
    Replied over 12 years ago
    Another GREAT product for the well informed and the DEVIL for a borrower that gets in over their head!
    Jason M Fox
    Replied over 12 years ago
    Another GREAT product for the well informed and the DEVIL for a borrower that gets in over their head!
    David Krushinsky
    Replied over 10 years ago
    Wow… I remember reading this article when you initially put it out Josh. Way to call that one.
    David Krushinsky
    Replied over 10 years ago
    Wow… I remember reading this article when you initially put it out Josh. Way to call that one. Reply Report comment