4.875% fixed rate loan !!
I am a news addict. I like reading news and listening to news a lot. At the start of my day, I listen to news in the morning during my morning routine. I have speakers mounted in the bathroom ceiling and the radio tuned to 103.5 wtop news.
Today I heard a commercial about lennar announcing a 4.9% fixed loan, with lots of disclaimers following the announcement. Check it out. I’m not related to lennar by any way nor I will benefit from anyone taking a loan from them.
I knew mortgages with even lower rates than that … all the way down to 2.5% fixed. I haven’t researched lennar’s loan, but from my previous research those very low rates are negative amortization loans. It’s those loans where the real rate is something like 6%, you pay only a smaller amount and rest gets added over your principal. So in reality, your principal grows and is not paid off.
If that 4.9% is not a negative ammo then it would really be a good deal! you know, the inflation in the united states is between 3%-5% i.e. money loses value at 3%-5% a year approx. If someone is giving a loan at 4.9% then they’re really pushing their risk level high - unless there’s a catch in there. If you add the effect of inflation plus the cost of the loan (salaries and wages to people working on it, commissions, originations …etc) a 4.9% fixed amortized loan is definitely either barely breaking even or a losing deal for the lender - I really don’t know how they’re making it happen.
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