Craigslist Mortgage Ad's *Beware* Part III

This post is a follow up to my first two postings Craigslist Mortgage Ad's *Beware* and Craigslist Mortgage Ad's *Beware* Part II. In those first two postings I have outlined in detail what the laws are in Florida on advertising Mortgage's.  Florida is very specific on their laws and have outlined in a ver simple format.  If you have any questions please refer back to the first two postings.

In this the final post of this series I will post one of these blantant ad's that are on Craigslist and also show you what you can do to stop them from posting them.

Below is the Ad I continue to see in some form:

Title: 5 Year Mortgage at 2.75% with NO Fee's

Refinance Today!!!
2.75% fixed for 5 years. A $250K Loan for $1000 per month.
This is not an adjustable option Amortization or Negative Amortization.
NO FEES...
We pay for the APPRAISAL...
No Broker Points...
We even pay for Title and Escrow in most cases....
These fees alone add up to $10K - 15$K on an average. We're SAVING you tons of money with this offer.
You can get CASH OUT pay your High interest Credit Cards off or just Refinance and save money.
The time is now!!! RATES went down, but the market has not recovered yet.....

Now lets take a closer look at this ad and break it down for my readers.

1. 2.75% is a Negative Amortization payment (No such payment exist if you pay that payment your balance will increase and you will be paying compound interest)
2. They are right the TRUE Interest rate of the payment is locked in for 5 years.  However your interest rate and payment rate are not the same.
3. No Fee's they say they will pay everything on your closing. Now  below I will show you how they can do this.

                                            MTA Index (this product is tied to) 4.79

                                            Margin (this is added to the index)3.25

                                           For a Final Rate of                       8.04% fixed for five years.

*Note the margin is decided by the broker and in this case I used a higher margin because in the advertising they claim they are paying all closing cost and please keep in mind they are entitled to a profit.

If we use this margin the commission earned would be on a $250,000 loan would be slightly over $9,000 but lets remember they claim they will pay all your closing costs. On average in Florida the closing costs without points or fee's are 2% of the Loan Amount.  In the example I am using the 2% would be $5,000 (real money)  which would leave a net $4,000 which is an average commission for this type of loan.  In addition please note that is NOT what the Loan Officer will earn. They will receive a percentage of that as a commission.

The sad part of this is the product is not a bad product when used in some cases and for a select few people who understand the loan and know how to use it. (Also not with that margin)

                                       What You Can Do to Stop Them

On Craigslist when you open an advertisement in the upper right hand corner you have links that you click on for the specific ad you are reading.

                                             please flag with care:

                                             miscategorized
                                             prohibited
                                             spam/overpost
                                             best of craigslist

If you see Ad's that are blatant misleading you can click on the appropriate link and it will be removed from Craigslist.

In the Mortgage Industry we have good and bad just like any industry that exists today. However, we have to remember our products that we use can either help the person or make them loose their home.  I know I can look at myself in the mirror every morning and know I do the right thing by my clients.

For More Mortgage Advice: Mortgage Advice in South Florida

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