I can’t stand it…..this is a RIDICULOUS loan.
It’s your ticket to the frightening sequel to Housing Meltdown #1.
Irresponsible Marketing
Let’s start with the movie title: “TAKE A SHORTCUT TO OWNING YOUR HOME SOONER”. This flick should have been called – “TAKE A SHORTCUT TO HANDING US YOUR KEYS”. This is simply irresponsible marketing. After you read this post, you’ll see why.
Read the Fine Print
The interest rate and the payment sure look enticing. It’s always the hook to get you interested. Let’s read the fine print behind the pitch of this postcard:
- Free biweekly payments? Sure, they’re free – because to charge for this would be robbery. Why? Because mortgage payments are ALWAYS applied as interest to the first of the month. The bank holds your money earlier – so they get to use it interest free. You make 26 payments and the extra 2 are applied AT THE END OF THE YEAR. This is just a gimmick to attract you to the product. Nothing more.
- Notice anything strange about this postcard? Right below all the great benefits, the card reads: “Final Payment: $228,024.44″. That’s right – this loan is due in 5 years. This is known as a “ballon payment” – because if you can’t refinance to get out of this mortgage when it’s due – the ballon pops. You can’t blame the bank for making this loan – they require 25% in equity…..so if you can’t pay it off – guess who gets the keys?
- Here’s the fine print from ING’s website: ”Easy Orange is a 5-year fixed-rate mortgage with payments (principal & interest) based on a 30-year payback period. At the end of the fixed-rate period, your remaining balance will be due, but you can take advantage of the Rate Renewal feature, which gives you the opportunity to extend your fixed-rate period for an additional 5 years at our current Easy Orange rate if you qualify.” PROBLEM – What if you don’t qualify?
Inflation
Only one word is necessary. It says it all – and it’s coming. When it does, the fuse is going burn so fast, you won’t be able run to safe distance when the bomb goes off. This balloon mortgage will pop (more like “go boom”)….and with it, your home.
Here’s what it looked like the last time around – mortgage rates skyrocketed to 16% in the early eighties. With runaway government spending, is 12% reasonable in our future? Heck – it might be a bargain.
So who’s gonna own your home? You or the bank?
Don’t get stuck with a toxic loan like this. If you can’t afford a fixed rate mortgage in this market, you can’t afford your home.
