What type of mortgage loan has a provision that says if rates fall to 4.5%, you automatically get that rate?

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I overheard real estate agents discuss this when I was touring model homes the other day. They were discussing it and one of them said the info was derived from one of their “trade” magazines. If this is true, what lenders offer this loan product?
I heard him said, this was a fixed-rate mortgage product, not an ARM!

More help please. I am having difficulty finding these.

1)No mortgage broker has a unique loan that no one else in the city can get.
True or False

2)If you were referred to a loan officer by a friend
A)You should not let that loan officer know that you were referred to him, because then he will think you will really trust him and won’t question him. As a result, the officer will think he can get away with giving you a very expensive loan. And typically, the more expensive the loan, the more commission the loan officer (salesperson) makes.
B)You should keep in mind that articles in magazines for loan officers (who are just salespeople), as well as speakers and trainers, tell them to concentrate on getting referrals because a referred client is easier to get a big commission out of.
C)There’s no problem with telling him. All salespeople are nice and won’t try to rip you off for tens, or hundreds of thousands of dollars over the life of your mortgage loan to get a higher commission.
D)Both a and b above.

3)Credit life insurance is a grossly overpriced mortgage add on that should never be taken.
True or False

4)Stated Income Loans
a) are known as “liar loans”
b) should never be taken by someone who can qualify for a standard mortgage.
c) Neither a nor b.
d) Both a and b.

5) Which of the following is true?
a) The best way to shop for a mortgage loan is to look at all of the terms of the loan and to get it in writing on a good faith estimate. You should try to get all of your good faith estimates on the same day.
b) Federal law requires lenders to provide you by fax, mail with postage date, email, or in person a good faith estimate as well as a truth in lending form within three business days of making a formal loan application.
c) Neither a nor b.
d) Both a and b.

Thank you very much

7 Comments
  1. Reply
    Tim
    January 21, 2011 at 7:08 am

    This is called “a loan that I haven’t heard of but would like to have”.

  2. Reply
    src50
    January 21, 2011 at 7:31 am

    ARMs come in many shapes and sizes. Beware.

  3. Reply
    Marysue
    January 21, 2011 at 8:30 am

    Sounds like some sort of ARM, and if it can go down it will also go up.

    Do you realize how many people are in or have gone foreclosure in the last couple of years because of ARMs?

  4. Reply
    estielmo
    January 21, 2011 at 9:04 am

    It’s a variable rate loan and i wouldn’t touch it with your 10 foot pole. It goes up as well.

  5. Reply
    Doctor Deth
    January 21, 2011 at 9:30 am

    fixed rate loans never change their rate – only adjustable rates and they can adjust upwards also

  6. Reply
    Khanoom Sarlak
    January 21, 2011 at 9:42 am

    I just know 5———> d

  7. Reply
    STEVEN F
    January 21, 2011 at 10:42 am

    1) FALSE. If they plan to sell the loan, they are required to follow EXACTLY the same terms as EVERY other lender that plans to sell their loans. If they plan to keep the loan on there books, they can use any terms they wish, but any other lender can do the same.

    2) E. None of the above. Whoever wrote the question is engaging in unjustified stereotyping.

    3) True. You can by MORE term insurance for MUCH less and the payout does not go down with the mortgage balance.

    4) D. They are called ‘liar loans’ because most people that apply are lying about their income. They should NEVER be taken out because the terms are MUCH worst than any other type of loan.

    5) C. A and b are BOTH impossible.

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