can an interest rate be this low?

[MichaelAngelo]

What is the name of your state? MD
I received a call from a mortgage company claiming that they can re-finance my home at only 3.4 percent FIXED for 15 years and 5.2% for 30 years. Is there something I'm missing? Because I checked the going rates are much higher than this. They are a well established company and their BBB record checked out ok. I did all the math and if this is true it will save a bundle of money. Is there some reason why their rate is lower than everyone else's or is there some kind of "catch"?

Thanks.
Mike

Originally Posted by MichaelAngelo

What is the name of your state? MD
I received a call from a mortgage company claiming that they can re-finance my home at only 3.4 percent FIXED for 15 years and 5.2% for 30 years. Is there something I'm missing? Because I checked the going rates are much higher than this. They are a well established company and their BBB record checked out ok. I did all the math and if this is true it will save a bundle of money. Is there some reason why their rate is lower than everyone else's or is there some kind of "catch"?

Thanks.
Mike

5.2% on a 30-year-fixed hasn't been an option for a while now.

I'd be skeptical. Make sure you read the fine print before signing anything.

[HomeGuru]

Originally Posted by MichaelAngelo

What is the name of your state? MD
I received a call from a mortgage company claiming that they can re-finance my home at only 3.4 percent FIXED for 15 years and 5.2% for 30 years. Is there something I'm missing? Because I checked the going rates are much higher than this. They are a well established company and their BBB record checked out ok. I did all the math and if this is true it will save a bundle of money. Is there some reason why their rate is lower than everyone else's or is there some kind of "catch"?

Thanks.
Mike

**A: you misunderstood or they lied. The 3.4% is an ARM with a term of 15 years. That is simply not a fixed rate mortgage.

[MichaelAngelo]

I did find one catch.... They said the costs to refinance could be up to ten thousand dollars (closing, broker fee, origination fee, points, etc.)

When taking these extra costs into consideration, I am still saving 92,000 dollars over the course of the loan by switching to 15 years at the new lower interest rate. Still seem too good to be true.

I will talk to them tomorrow and try to find out what info they might be withholding.

Originally Posted by MichaelAngelo

What is the name of your state? MD
I received a call from a mortgage company claiming that they can re-finance my home at only 3.4 percent FIXED for 15 years and 5.2% for 30 years. Is there something I'm missing? Because I checked the going rates are much higher than this. They are a well established company and their BBB record checked out ok. I did all the math and if this is true it will save a bundle of money. Is there some reason why their rate is lower than everyone else's or is there some kind of "catch"?

Thanks.
Mike

Take a look at this:

LOAN TYPE TODAY +/- LAST WEEK
30 yr fixed mtg 6.18% 6.15%
15 yr fixed mtg 5.83% 5.81%
5/1 ARM 5.81% 5.78%
30 yr fixed jumbo mtg 6.41% 6.36%
5/1 jumbo ARM 5.91% 5.89%

Some is pullling your leg! Be careful.
You can check this out yourself @:[URL="http://www.bankrate.com/brm/rate/mtg_home.asp"]http://www.bankrate.com/brm/rate/mtg_home.asp[/URL]

[pojo2]

I am still saving 92,000 dollars over the course of the loan

Only if you stay there 15 years and pay off the loan

What more do you need to know than the interest is nothing compared to the closing costs, IF and a gigantic IF the interest rate is real and does not have catches attached.

How much is the loan?

[alent1234]

Originally Posted by MichaelAngelo

What is the name of your state? MD
I received a call from a mortgage company claiming that they can re-finance my home at only 3.4 percent FIXED for 15 years and 5.2% for 30 years. Is there something I'm missing? Because I checked the going rates are much higher than this. They are a well established company and their BBB record checked out ok. I did all the math and if this is true it will save a bundle of money. Is there some reason why their rate is lower than everyone else's or is there some kind of "catch"?

Thanks.
Mike

read the docs and the GFE

sounds like a negative ammortization loan. you pay a lower rate, but the difference between the real rate and the rate you pay is added back to the principal. If your house is worth $200,000 now than you are probably looking at your principal growing by $6000 per year or something similar.

[MichaelAngelo]

The total loan would be 187,000.00. This includes 145,000.00 mortgage, 28,000.00 debt consolidation and the possible 10,000 lender fee.

Time left to pay off mortgage: 27 years
Current Mortgage rate: 6% fixed
Average rate on current loans: 6.5%

My aim is to pay everything off in 15 years and save as much money as possible.

[alent1234]

you aren't going to get a better rate these days than what you have now. Anyone who says they can is selling you one of the loans with a low teaser rate and then it will adjust according to the LIBOR or some other index plus a premium. And any teaser rate below 6.5% is most likely a negative ammortization loan where you don't pay the full interest and your principal will actually increase.

Don't do it. Interest rates will most likely go up and you may be paying 9% in a few years.

[MichaelAngelo]

Aren't there laws that prevent lenders from raising interest rates on a fixed rate loan?

Originally Posted by MichaelAngelo

Aren't there laws that prevent lenders from raising interest rates on a fixed rate loan?

You really want to do this..... don't ya?

The thing is, what they are telling you and what it actually is are two different things. You'll find that out when (hopefully before) you sign on the dotted line.
This IS NOT a 5.2% 30-year fixed loan unless this thread is supposed to be dated with the year 2002.

[Blue Meanie]

They may be "buying" down the rate...You get charged points to do that..

[pojo2]

Originally Posted by MichaelAngelo

Aren't there laws that prevent lenders from raising interest rates on a fixed rate loan?

You have no one here who thinks this is a good idea so be advised that when you go into this deal (I suspect you will or already have) do not start screaming PREDATORY LENDER when some of the things you have been warned of come to pass.

You have people in the biz in different aspects answering your post!

[yote]

I don't know about the rate, but I do know that consolidating $28k debt in payments over 15 years is not usually the way to go... unless you're paying like 18.5 % on your cards or something crazy like that and if you are I doubt you'd qualify for the rates mentioned without paying like 10 pts.

[alent1234]

Originally Posted by MichaelAngelo

Aren't there laws that prevent lenders from raising interest rates on a fixed rate loan?

read the loan docs

i doubt this is a fixed rate loan and they will just tell you to sign something and that is it. The index for this is the 10 year treasury bill which is around 5.15% now. US government debt is considered risk free. Who is going to lend you money at an increased risk level when they can just buy T-Bills and get a better return? you really can't be that naive?