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Lindie
Lindie, Parent
Category: Parenting
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Experience:  3 Children of my own... 3 Step Children..
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Is 1,75% interset for 5 years fixed a legitimate mortgage offer

Customer Question

I received an offer to get a 5 year fixed arm mortgage for 1.75% is this real and whats the catch .How can a company lend money at a rate 4%under the prime lending rate?
Submitted: 11 years ago.
Category: Parenting
Expert:  Lindie replied 11 years ago.

You are saying a 5 year fixed arm... It's can't be a fixed and an arm.. Unless you are saying a fix for 5 yrs then you move into an arm.. please clarify.

Customer: replied 11 years ago.
Reply to Lindie's Post: Thanks for the quick response and yes you are right the loan turns into an ARM after 5 years.How can it be possible for this company to lend money at this rate?
Expert:  Lindie replied 11 years ago.



It could be possible. But there is that small print that needs to be looked at. Of course no company will lose money. So you would have to look at some of the following:


i.e.: Pre payment penalty, is that rate based on a certain credit score, is there a possible application fee, is it only an interest bearing for the 1st 5 years?


So to answer your question a company can offer that interest rate, but usually from my experience (Which I work with banks, lending Co., Title Co, for closing of home equity loans, Refi's, purchase loans) there are several stipulations. You would have to find out what those stipulations are and the terms.


Another thing a company may do is say they have this rate, then they may process your information and once all paper work is submitted then all the figures change for several reason including credit score, amount of equity in the home. Appraisal on home, length of time on the job, your income etc.



Hope this helps, Good luck!



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