More on small print . . .

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I know that I have already posted on the small print of the mortgage business and about some of the ridiculous things you will see in TV mortgage commercials and other advertisements, but one advertisement sent to me by a customer last week and the one I saw on TV this morning are worth knowing about (and the laugh).

One of my past clients, had received an interesting fax, boasting of interest rates from 3.25% to 3.97% in really big, bold letters.  He emailed me a copy of the fax so that I could take a look at it and let him know what the deal was.  He guessed that the offer was too good to be true, and he was right.  Well, I take that back, maybe not too good to be true . . . just too good to be of any good. 

Problem number one: the offer had 3.25% – 3.97% listed as the APR (or annual percentage rate).  Because some closing costs are factored into an APR, the APR is higher than the actual interest rate — which if I had to guess, would put the interest rate on this advertised mortgage, say, at 1%.  Which would probably mean an MTA type loan. 

Problem number two: the offer said that the loan was a “FIXED TERM MORTGAGE” not to be confused with a fixed rate mortgage, I guess.  Wouldn’t all loans be fixed term mortgages?  Or are their loans out there with an indefinite term?  Hey, this way you could pay back what you wanted, when you wanted.  ha. 

Problem number three: small print — “limited funds available” — any time that an offer claims there are only ‘limited funds’, or it is a ‘special investor limited-time offer’ or the deal at ‘an interest rate so low I had to agree not to advertise it on the radio’, run away as fast as you can.  Please don’t get confused though; this is NOT the same thing as working with a mortgage professional who watches the mortgage-backed securities market and he or she warns you that the interest rate that you are discussing may not be available tomorrow. 

To my client’s credit . . . he knew that the fax was completely suspect (it was one of those “to all employee” type faxes — this one only one rung up the annoying-advertising ladder from the “Dear Human Resources . . . $99 vacation to the Bahamas”).  I can’t blame him for trying to save some money.  I am just glad he emailed me to find out the truth.  

If you saw me on the treadmill at the gym this morning, you probably would have thought I was a nut — “hey is that guy laughing at a mortgage commercial?  what a weird-o?”  (Granted, if you saw me on the treadmill at 5:25 AM, you may think I was a weird-o even without the laughing at a mortgage commercial thing).  Just to set it up, the commercial was nice enough, people smiling in front of a new house, a family playing board-games in their den, children laughing and so on.  There were a few screen-shots of operators (standing-by, I am sure) and office-space, more houses, more smiling, more children, lots of hand-shaking, etc.  And then in really BIG, block letters, “90% of qualified applicants accepted!”  What?!?  What the heck does that mean?  What happened to the other 10% of “qualified applicants”?  It’s not that their loans were denied, right?  It’s not that they were not qualified.  They were qualified; just didn’t make the cut I guess.

Maybe I should add that to the my website, “100% of all qualified applicants accepted!!  If you want a loan, and if you qualify for a loan, then we will accept your loan!” or maybe, “Guaranteed approval of your loan, if the underwriter approves your loan!”

Still can’t figure out why they wouldn’t accept the other 10%???

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