Friday, August 13, 2010

I feel like a chump.

Those who know me well know I can be a bit gullible because I like to believe people tell the truth.  I try to live my life with honesty and expect others to as well.  Unfortunately, some people out there just want to make a buck.  My mortgage broker falls into that category and gets the bozack for the lies he told me.

Lie #1: You can sign up for bimonthly payments which help you pay down your debt faster.
The truth: Nope, you can't.  You can sign up for bimonthly payments, but no money is applied towards your monthly payment until it equals or exceeds what you owe each month.  I should've been more skeptical because why would a bank help you make them less money?  Gah.

Lie #2: When interest rates go down, FHA loans automatically get locked into the lower rate.
The truth: The woman at the bank laughed at me over the phone when I asked this question.  Crikey.  The interest rate is locked in unless I refinance and that costs money.

Lie #3: You can have your house reappraised if the market goes up to stop paying primary mortgage insurance.
The truth: I asked my bank this question because PMI costs me about $150/month.  They sent me a letter which says I have to pay PMI until my loan value to purchase price is less than 78%.  According to the amortization schedule, I'll have 22% equity in about 10 years.  So...I need to give my bank about $18k as a penalty for not having a lot of money for a down payment.  I can hit 22% equity faster by paying down the principle faster, but I have less cash because of the PMI.  Crikey.  A vicious circle for sure.

All three lies sound to be good to be true, but I still can't believe he would lie to me.  I should be more careful next time for sure.

No comments: