Primerica SMART Loan?

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I’m interested in learning what you know about Primerica’s loan program that is backed by Citicorp Trust Bank. Citicorp is a huge financial institution and one would assume if their products were bad it would be all over the news. I keep reading about Primerica’s pyramid structure, but I’m more interested in their mortgage loan program. My neighbor approached me about a refi (since i’m refinancing anyway) and handed me the paperwork for the “Smart Loan”. I researched it and saw SO MUCH bad press about Primerica being a scandelous sceme, but nothing about their products that are supported by Citicorp. Can someone please shed some light for me? I do not want to get involved in a pyramid business at all but I can’t find anything out about their loan programmes. Help!!!! Should I just go straight to the citibank and deal with them rather than primerica who has a terrible reputation?
Oh and I have a 798 Fico and refuse to do anything but a 30 yr fixed. I will not work with Wells Fargo because they coded my 30 yr fixed as an ARM and it took me many hours of he!! to have it corrected on my credit report.

I’m trying to compare my existing conventional mortgage (27 years remain on a 30 years loan at 5.85%) to a Primerica SMART loan (23 years at 5.93%).

I’m looking to refinance to eliminate a 2nd mortgage (15 year + balloon 2nd at 7.5%). And I’m wondering how to best compare a conventional to a SMART loan.

Thanks!

6 Comments
  1. Reply
    nickelrustler
    February 21, 2011 at 7:28 pm

    I would steer clear of Primerica. And Citigroup for that matter. Bank Of America has a great reputable program that you can trust. As do many other companies.

  2. Reply
    amstarlender
    February 21, 2011 at 7:53 pm

    the smart loan is a potential negative am product if you make the low minimum payment you are differing interest on your loan. It does benefit commission or seasonal income folks. if this is what you are looking for its a ok product. As to citigroup, they are a good lender they just acquired another lender. I assure you that you wont have issues with them. Now addressing the Primerica portion they’re a broker house if you are concerned don’t use them. you can choose from a long list of brokers to use. Also some say to go bank direct its cheaper!!! not true!!! broker have access to a list of lenders and at wholesale pricing. Banks are retail based. I can beet a banks offer any day of the week easy. hope this helps. The one statement I will leave with is you must feel comfortable with your mortgage company. If not move to the next.

  3. Reply
    Mr. Magoo
    February 21, 2011 at 8:39 pm

    Deal with a large lender. Countrywide is the biggest. Bank of America. Wells Fargo. Chase Home Finance. Washington Mutual (WAMU) (although they have a lousy reputation when it comes to service). Citibank is one of the smaller players, but I would be more comfortable dealing with them than with Primerica. You might be able to find a cheaper loan through a broker – don’t bother unless you’re desperate to do it at rock bottom. I just don’t trust them. You can get screwed up bad by some of these fly by night operations. I’d rather pay a little more for the peace of mind that my loan is going to go through in a timely manner and that I won’t be getting bait and switched to a rip-off loan at the last second. It’s a jungle out there. Oh, and don’t take any Option ARM loans or Interest Only loans. You could wind up with negative amortization (you owe more than the debt you started with) and/or negative equity (you owe more than your property is worth). Don’t ever let anyone switch your loan on you at the last minute and especially don’t let them talk you into taking a B/C loan (for people with bad credit – always a major rip-off). Don’t let them tell you that you can always refinance before the ARM change date. Things can change. You could lose your job. Your spouse could lose their job. The value of your property could go down. Then you will be stuck with a loan that is killing you and that you can’t refinance.

  4. Reply
    Ross
    February 21, 2011 at 9:13 pm

    I just looked into one of these. For me it didn’t work, they would only refi up to 5 acres, I have more than that, and they had steep early payment penalties for the 1st 3 years of the loan.

    They figure interest on a 14 day billing period, making 13 payments a year. That is unique to them and it will pay your loan down quicker than a traditional loan with a 30 day billing period and paying a 13th payment every year. I did the math and it will work like they say.

    I never got as far as seeing what their fees would be so I don’t know if they are overcharging or not. They will also try to recruit you to work for them. Their company structure is basically an MLM.

    In summary, depend on their fees and and if they pre-payment penalties are and issue will depend on whether or not it is a good deal. They way the loan is set up will work.

    They will try to sell you a bunch of their other products and I have no advice on what or if any of them are worth while.

  5. Reply
    Primerica Debate Team
    February 21, 2011 at 9:38 pm

    Primerica’s SMART loan uses simple interest calculation while a conventional mortgage uses schedule interest calculation.

    Schedule interest is where payments are credited to interest and principal on the due date, whether you pay it a little early or little late. Most lenders use schedule interest method. Your amortization schedule is already fixed since the first day you sign the loan contract.

    Simple interest is where the interest portion of the payment depends on the actual number of days that have past since the last payment. If you pay it early, more of your payment is applied toward the principal. If its late, more goes toward interest. If its on time, there is no difference between schedule interest and simple interest. However, if you were offered a bi-weekly payment (meaning your monthly payment is split in half and you pay this amount every 14 days), the savings on a simple interest method is huge!

    Take a look at this example:
    $ 100,000 loan with a 10% interest.
    Monthly payment is $ 877.57

    With schedule interest calculation (which is used in mortgages), this is how the loan work:
    Month 1: $ 100k x 10% = $ 10,000 interest
    $ 10k divided by 12 months = $ 833.33 is 1st month interest
    $ 877.57 – $ 833.33 = $ 44.24 goes toward the principal

    Month 2: $ 99,955.76 x 10% = $ 9,995.576
    $ 9995.576 / 12 = $ 832.96 is 2nd month interest
    $ 877.57 – $ 832.96 = $ 44.61 goes toward the principal

    As you can see, it takes a very long time to build equity in your home.

    With simple interest calculation (which is used in all loans from Primerica) and you pay every 14 days, this is how the loan work:
    Month 1 (day 1 – 14): $ 100k x 10% = $ 10,000 interest
    $ 877.57 divided by 2 = $ 438.79 bi-weekly payment
    $ 10k divided by 365 days = $ 27.40
    $ 27.40 x 14 days = $ 383.60 (first 14 day interest)
    $ 438.79 – $ 383.60 = $ 55.19 is applied toward principal

    Month 1 (day 15-28): $ 99,944.81 x 10% = $ 9994.481
    $ 9994.481 / 365 = $ 27.38
    $ 27.38 x 14 = $ 383.32 (second 14 day interest)
    $ 438.79 – $ 383.32 = $ 55.47 is applied toward principal

    Month 1 summary: Your total payment from day 1-28 is $ 877.58. $ 766.92 is interest payment and $ 110.66 is applied toward principal.

    Month 1 – 2 (day 29 – 42): $ 99889.34 x 10% = $ 9988.934
    $ 9988.934 / 365 = $ 27.37
    $ 27.37 x 14 = $ 383.18 (third 14 day interest)
    $ 438.79 – $ 383.18 = $ 55.61 is applied toward principal

    Month 2 (day 43-56): $ 99,833.73 x 10% = $ 9983.373
    $ 9983.373 / 365 = $ 27.35
    $ 27.35 x 14 = $ 382.90 (forth 14 day interest)
    $ 438.79 – $ 382.90 = $ 55.89 is applied toward principal

    Month 2 summary: $ 766.08 is interest payment and $ 111.50 is applied toward principal.

    Eventually, the bi-weekly payment plan with simple interest will pay this 30 year loan off sooner by a few years than a traditional mortgage that uses schedule interest.

    Three questions you should ask yourself when you considering to refinance;
    1) What is your total cost?
    2) When will you be out of debt?
    3) What is your interest rate?

    Hope that helps

  6. Reply
    Agency Builder w/ BTID
    February 21, 2011 at 10:34 pm

    If you compare two loans of equal value, the one with the lower interest will be paid off faster if you add the same amount of extra payments. He is the article I share with a couple of my clients when they were soliticited. You make your decision. Refinancing at a higher rate makes practically no sense at all.

    http://www.dallasnews.com/sharedcontent/dws/bus/scottburns/columns/2005/stories/031305dnbusburns.495e8.html

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