We have all seen the advertisement on the internet of a woman in a bikini and her quote “mortgage rates are at 2%”. Any time you see an interest advertised that is too low to believe, it is called a Teaser Rate. That lender is advertising that rate to get you to call and then give you a higher rate. Teaser Rates can be found anywhere, even advertised by a local lender. Here are 4 questions to ask yourself before you believe a Teaser Rate:
1. Does it sound reasonable?- If other lenders are quoting 4% and you found a lender offering 3.5%, something should smell fishy. That is a sign, since that rate may not be possible.
2. Do you know the lender?- Is that rate being advertised by a reputable Bank or Mortgage Lender? Were you referred to this Lender by your friend or Realtor? If not, stay far away from them.
3. Is it a Fixed Rate?- Find out if the rate is fixed and for how long? It may be an adjustable rate that could most likely increase on you in the future
4. Do Know Your Own Situation?- Not everyone has the same credit and mortgage situation. So before believing an “unbelievable rate” know your situation. What type of loan are you doing(FHA, VA, Conventional, Jumbo). Know your credit score. Is your situation unique? All these factors can affect your rate.
Before believing a Teaser Rate, do your homework. Or you could be in for a big surprise!
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