Deceptive mortgage practices

March 25, 2008

online mortgage ads An example of a rather deceitful ad disguised as a news article.

A couple of points. The Fed rate cuts have nothing to do with long term mortgage rates and in fact, on several occasions when the Fed cut the Fed Funds rates, both 10 year Treasury Bonds and mortgage backed securities (what mortgage rates are actually based on) were actually higher.

The real monthly payment for a $180,000 mortgage is approximately $1080 for principal and interest at a fixed 6% interest rate. Don’t forget to add approximately $150 to $200 per month for insurance and taxes for a total payment of approximately $1250.

$699 could be your payment for the first month or possibly the first year but certainly not for the life of the loan. Don’t be fooled into thinking you can buy a $180,000 home for $699 per month and don’t forget, you need good credit, your income must be verified and a down payment is helpful.

This type of deceptive advertising is especially shocking today considering the subprime mortgage meltdown and the corresponding credit crunch. If you are interested in buying a home in the Charleston real estate market, I know several very good, reputable lenders who can offer you the best possible loan rates and will thoroughly review the terms of the loan with you.

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