real estate loans/refinances are really scams/lies?

[msongs]

hello,

just got papers to sign to refinance a house. advertised interest is 4.25, which is nice and low.
however in reviewing the final totals sheet we see the payment based on total loan amt is NOT
.0425 X loan amount. Rather is is actually .0499 X loan amount. Effectively this alleged 4.25% interest loan is actually a 4.99% interest loan. so why the difference? If there is a bullcrap reason, why not just tell people it is a 4.99% interest loan and skip the bullcrap?

We are gonna call the loan company and ask about that but don't expect a really reasonable answer, which should be "sorry we made an error and you will get your payment changed to be 4.25%". No doubt they will have some sort of baloney to hand us. And this is a very reputable company not some shark.

An ordinary person would think this is some kind of scam or bait and switch I think.

Msongs

[BlooInBloo]

1. For the most part, yes.

Treating your home like an ATM is really not a good idea, generally speaking.

[Oregone]

2. Is the interest compounded weekly or something?

Or is that displayed as some "effective" interest rate after they roll the closing costs into the principle of the loan?

Anyway, yeah, I generally agree the entire concept is a tad scammy. Im up here in Canada now. Interest can only be compounded twice a year. Every couple of years you get to renew a mortgage, and get a new table based off of the new principle amount (so if you spend 3 years paying extra, you can lower you payments dramatically and keep the same loan term length). All in all, if done right, it lowers the cost of borrowing dramatically.

The system is rigged pretty tightly in the US, in favor of the house.

[msongs]

3. either way house payment goes down quite a bit, but my way = much $$ less nt

[dixiegrrrrl]

4. Nevere sign re=finance papers without your own real estate attorney. Period.

I did not know until recently that if you re-fi, your loan becomes a recourse loan, which means if god forbid you ever have default, they can come after everything you own, not just the house.
In today's market with shady dealings so well known, I would cheerfully pay any amount necessary to MY own real estate attorney to look over the paperwork.

[HCE SuiGeneris]

5. If you are not bringing cash to the table

the fees are rolled in and you are paying a different rate to cover the extra amount.