Going to buy a house (loan question)?

Question

I'm going to buy a house next month and my agent told me that she can provide us a 2% interest rate if we put 10% down, it's only for 3 months and our fourth month payment gonna me more like maybe we"ll get 6.25% I Rate and then we can refiance it for 3 months like we can do this for 1 or 2 year then we can get a fixed rate for 15 year. so my question is is this a good options. b'coz i don't want to be in trouble in few years.

Answer 1

Talk to more than one lender. 2% is under market rate so either it's a negative amortization loan (very bad--stay away from those) or it's low to get you qualified now. Don't get qualified based on 2% and then buy more house than you can really afford because that is exactly how people end up in forclosure. See if you can get a fixed rate off the bat, see what you qualify for that, then you don't have nasty surprises when the interest rates jump.

Answer 2

That 2% is a negative amortized product. Basically your payment may only be $1000 but the interest accumilated during the month maybe closer to $2000. Where does this extra $1000 go? Right back to your existing loan balance.

Why would she recommend that you do this and then refi in 2-3 MONTHS? You do realize that every refi will cost you several thousand, right? Depending on your state and your specific situation you may even be paying closer to $6000 - $8000 for a refi. This makes no sense.

I would specifically ask your agent what the fully indexed rate on this loan is. You will most likely find that your REAL insterest rate is closer to 6.75-8.00%. You can do alot better tha that with a 5/7/10/30 year fixed even with an inetrest only option! Take a look at your truth in lending statement. Look at the APR. It will tell you really what your paying on the loan. I will bet it is 7% or higher if your mortgage person actually filled out all of the fields in the computer so that the APR can be calculated.

Take a few minutes of your time to save yourself THOUSANDS and possibly a forclosure in the future. Speak to another mortgage broker/loan officer you trust. Get a refferal from Mom and Dad if need be. Let someone else look your numbers over and see what they come up with. Once you have established a feeling of trust with that person tell them your thinking of this loan with a 2% payment and see what they say; have them fully explain the program and I think you will find that this loan is too good to be true.

Good luck.

Kevin 866-562-6838 x 106
[e-mail]

Answer 3

I agree with everyone else on this deal. It is a negative amortization loan after the 3rd month. That means that your balance will go up each month. It is a smart loan for some people, but very dangerous to those that do not know how to maximize their benefits. Being that you are asking this question here leads me to believe that it will be a dangerous loan for you.

If your loan officer says that you can refinance every 3-4 months I would run far far far far away and when you can't run any further, take a taxi. Just the costs of refinancing will cost you thousands upon thousands of dollars. Also, I can bet this loan officer will add a pre-payment penalty to this loan, which means if you refinance it the bank will charge you a boatload of additional fees to pay it off. Pre-payment penalties are VERY common on these types of loans and one of the biggest reasons people get in trouble with these loans.

Maybe you will get 6.25%?? I would read the fine print. Most of these will be closer to 7-8% after the 3rd month. I would not rely on a MAYBE, look at the actual rate and know for sure!

Good luck,

Greg S.

Answer 4

relies upon upon the variety of private loan. in case you be ready to get a private loan like this that may not a shape very own loan, then sure, you will possibly get the money as we talk. Difficultly is that the homestead might might desire to appraise for a minimum of 183 as is. shape loans each so often have a timed launch. ie challenge anticipated to final 60 days, you get a million/2 the money up front and something when you may tutor that fifty% of artwork is carried out.

Answer 5

Watch it on the refinancing part, especially if your agent has a hand in it. Everytime you refinance with him, he gets a commission. It sounds too good to be true then watch it. Seems you are saying you are refinancing every couple of months for a new rate. SOMETHING IS UP. You know. You should look at the possibility of building a house or getting one built. If you are a vet let me know and I can tell you more. If you want some info on building your house let me know and I can give you the info I found. I found that for $50,000, I could build a 1800 sq ft house worth more than the $50000. Cuz you can not buy a new house for that money anywhere that I know of.

Answer 6

That's a VERY shady loan! Get qualified for a fixed rate loan at market rates. That way you know what you can REALLY afford.

Those teaser rates can sky-rocket quickly and you could find yourself in deep financial difficulties even before the new paint dries.

Tip: This agent has ulterior motives. I'd drop her. That loan is NOT in your best interest and she's probably getting a kickback on it that she's not disclosing. That's illegal AND unethical.

Answer 7

I totally agree with bostonianinmo. Your real estate agent should not have anything to do with your financing. Get a legit loan.

Answer 8

If you are buying a home you should check out gigils.com.
It will help you.