Does anybody know just about 3% mortgage interest rate?
Answers:
It's probably a "teaser rate". Like the previous answer, beware of scammers. Ask, then check the paperwork, don't purely take the loan officers word, how long that 3% last?
And don't take the answer of your payment will be base on 3% for X numbers of months. Ask when the interest rate changes.
It's called a "teaser" rate. It gets you to pick up the phone. It doesn't exist within real life.
Some brand new home builders own their own mortgage company. If you see a builder offer this rate, it may exist. If they own the company, they make money on the house and don't assistance about the mortgage. It's one of the reasons that populace love to buy new homes.
In a nutshell... really oversimplifying but here goes: whenever you see a rate MUCH lower than normal... and ordinary today being a 30-year FIXED rate at around 6 to 6.5 percent (depending on a few things) ... then probability are, in today's market, they are offering you what is specified as an Option-ARM or Pick-a-pay or Power ARM or whatever similar label the mound wants to call it... roughly what they do is base your PAYMENTS on the 3% rate but charge you much higher sometimes 4, 5 even 8 % greater than the rate used to calculate your payment. How is that you ask? Well, the difference between the low rate they floor your payment on, and the much higher rate they in actuality charge you for is added to your loan's balance. So as the months go by, your loan is getting bigger and bigger if you choose to net your minimum payment allowed. There are also some other components of this type of loan that are very celebrated to mention (recasting provisions, initial rate's duration, margin, etc), but not as relevant to your question as what I mentioned above, a angelic broker or loan officer will tell you about them. As next to all mortgage programs, there are some remarkably limited legitimate uses for this program but it is heavily abused by brokers, and not explained ably, which is where it gets gross. Source(s): Licensed mortgage broker
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