What's the deal with LowerMyBills.com, is it legitimate? How can they offer interest rates so low that you'll get $500,000 for $1,600/month? What's the catch or hidden fees??
2006-10-14 02:04:44 · 6 answers · asked by Another IT Guy 2 in Business & Finance ➔ Renting & Real Estate
In the case of LowerMyBills, their advertising is predicated upon something *worse* than interest only - A Negative Amortization loan. Called by any number of friendly sounding names, like Option ARM and Pick A Pay and 1% loan, these are a way to put the most powerful force in the universe - compound interest - to work for the bank and against you, while being able to quote you a low monthly payment to make it seem very affordable, but that payment doesn't cover what you're really being charged in interest. The difference goes into your balance. In other words, you owe the lender more money every month. The real rates people are being charged for these start between 7.5 and 8 percent right now. By contrast, I've got thirty year fixed rate loans below 6 percent for decent (not great!) credit. Furthermore, every single Negative Amortization loan I have ever seen comes with a three year pre-payment penalty, so after you figure out you've been had, they're going to get you for several thousand dollars more to get out of it.
In short, they are advertising a way to commit financial suicide. You can read a lot more about them on my website, among other places. There are legitimate places to use them, but they are less than 1% of the people they get sold to. They should *never* be a purchase money loan for a primary residence, but according to Board of Realtor statistics, they were used to fund 40 percent of all purchases locally in the last two years.
2006-10-14 03:56:19 · answer #1 · answered by Searchlight Crusade 5 · 1⤊ 0⤋
Interest only loans are not good for about 98% of the population, but in certain circumstances they can be the way to go.
For instance, if you live in an area where real estate has no shot in hell of bottoming out or seriously stalling, you can buy with an interest only loan and sell in a year or two and make some serious cash.
For most people though, I wouldn't advise it.
2006-10-14 02:29:14 · answer #2 · answered by BoomChikkaBoom 6 · 0⤊ 1⤋
want greater info till now giving an opinion. The call on my own looks like a economic workplace, yet many scams sound expert and that's how they gain scams. do a splash learn. Do they provide a highway handle, working telephone huge type, touch call? if so, shop on with up with them.
2016-10-19 09:22:46 · answer #3 · answered by Anonymous · 0⤊ 0⤋
When you see ads like this, it is for the MTA program. This payment is based off a start rate. If you were to pay only that amount, you would actually increase your principal balance.
more on the mta program, http://www.choicefinance.net/mta-option-arm.htm
2006-10-14 04:09:20 · answer #4 · answered by Anonymous · 0⤊ 0⤋
If you're concerned that it might be a scam go to this site and read up on it.
Predatory Lending information from ABA: http://www.aba.com/Consumer+Connection/CNC_pred1.htm
Buena Suerte
2006-10-14 02:20:32 · answer #5 · answered by newmexicorealestateforms 6 · 0⤊ 0⤋
THese are "interest only" mortgages
2006-10-14 02:11:50 · answer #6 · answered by Jenyfer C 5 · 0⤊ 1⤋