Does anybody know about 3% mortgage interest rate?

Question

Does anybody know about 3% mortgage interest rate?

Answer 1

It's probably a "teaser rate". Like the previous answer, beware of scammers.  Ask, then check the paperwork, don't just take the loan officers word, how long that 3% lasts?

And don't take the answer of your payment will be based on 3% for X numbers of months.  Ask when the interest rate changes.

Answer 2

In a nutshell... really oversimplifying but here goes: whenever you see a rate MUCH lower than normal... and normal today being a 30-year FIXED rate at around 6 to 6.5 percent (depending on a few things) ... then odds are, in today's market, they are offering you what is known as an Option-ARM or Pick-a-pay or Power ARM or whatever similar label the bank wants to call it... basically what they do is base your PAYMENTS on the 3% rate but charge you much higher sometimes 4, 5 even 8 % higher than the rate used to calculate your payment. How is that you ask? Well, the difference between the low rate they base your payment on, and the much higher rate they actually charge you for is added to your loan's balance. So as the months go by, your loan is getting bigger and bigger if you choose to make your minimum payment allowed. There are also some other components of this type of loan that are very important to mention (recasting provisions, initial rate's duration, margin, etc), but not as relevant to your question as what I mentioned above, a good broker or loan officer will tell you about them. As with all mortgage programs, there are some very limited legitimate uses for this program but it is heavily abused by brokers, and not explained well, which is where it gets ugly.

Answer 3

It's called a "teaser" rate.  It gets you to pick up the phone.  It doesn't exist in real life.

Some new home builders own their own mortgage company.  If you see a builder offer this rate, it may exist.  If they own the company, they make money on the house and don't care about the mortgage.  It's one of the reasons that people love to buy new homes.