Have you seen the ads boasting ridiculously low interest rates? We have, and we think you should be cautious. There is a term in advertising called “bait and switch”, and it’s illegal.
In just the past month rates have gone up by about 1 percent, but you’ll still see rates being advertised far below the national average. They pull you in and you end up with a loan that is completely different from what was advertised.
We don’t want you to get scammed, so here are a two things to look out for in advertisements about interest rates.
Be careful when the ad touts low “fixed” rates without mentioning the length of time it will be fixed. If it is “fixed” for an introductory period, it could be fixed for as little as 30 days!
Be cautious when the ad talks about payment amounts. There are many ways to push a payment amount down. One common way to do it, is to get an “interest only” loan. Often these types of loans have the balance due in one lump sum at the end of the loan period. If you didn’t have the money, then you would probably need to take out a new loan and pay all the associated fees and closing costs.
Getting a mortgage is a very important decision, and one that needs to be thoroughly researched on an individual basis. To help you learn more about deceptive mortgage rate advertising, read this article from the Federal Trade Commission.