Nov 19, 07:17 AM by Steve | The Small Print
Posted in Miscellanea
I get so much financial junk mail it makes my email inbox look nearly spam-free. I usually just throw them away but I just decided to look at one—it was packaged up all nice and official and even though I knew it was junk my curiousity got the better of me. It went something like this:
RE: Americas Wholesale Lender
Original Loan: $XXX,000Re-Negotiation Department
Assigned To: Ben AndersonDear Steve Weixel,
Your first mortgage originall funded by Americas Wholesale Lender can be restructured to a FIVE Yr fixed payment of only $1,856 per month.
This is not a typographical error. Your payment rate is only 1%* and is fixed for FIVE years. Our re-negotiation staff has researched the records to make a comparison of our new loan program to your existing loan, This is the lowest payment in the mortgage industry.
Blah, Blah, Blah.
*Payment Rate 1%/6.70% APR. Deferred interest wll accrue.
That there is the trick: Deferred interest wll accrue. They payment will be lower because the interest is not being paid, but it still accrues. Then at the end of 5 years you owe more money, not less. Reverse-amortization, gotta love it. The sad thing is that people fall for this, and don’t realize what it means.
