No Pmts 12 months?

[lostkitty]

What the heck is this? I saw it on Realtor.com Anyone able to educate me? Sounds fishy… Like he’s selling mattresses.

http://www.nopaymentsfor12months.com/

[Steve Beebo]

I don’t know what the deal is, but I know this loan agent. He is very successful. I’ll ask him about it next time I talk to him.

[sdduuuude]

A common trick at carpet stores, stereo stores, etc is to say 1) “no payments for 90 days” or 2) “90 days same as cash”

Most people assume when they see #1, they will not pay interest, and when they see #2 they won’t make any payments for 90 days.

In fact, “no payments for 90 days” means after 90 days, you will pay the purchase price plus a boatload of interest.

“90 days same as cash” means – you will make three payments in the next 90 days. It doesn’t mean you can wait 90 days before paying anything.

The ad Doesn’t say “no interest” for 12 months so I would assume you get killed on interest the first year.

[lostkitty]

Right, the interest would be accruing as always, but doesn’t SOMEONE have to make payments to the bank that first year?

[powayseller]

Could they really defer the interest on the books, just as they do with the neg-am mortgage? The interest accrues in the first year, and is paid starting in Year 2. This would cause a big jump in payment. Fascinating – the creativity of lenders keeps me laughing. By this summer, they’ll figure out how to sell a $650K home to someone with a $40K income.

[sdrealtor]

Remember Stupid Pet Tricks on letterman…well this is Stupid Lender Tricks from a lender. there is no deferred interest. Basically it works in a falling market because comps support higher prices than are being paid. Here’s how it works. Buyer negotiates price and adds 12 months payments to the price. Lender lets seller credit buyer and pre pay the first year. Buyer has a bigger loan but gets interest writeoff for first year without making payments.

My thought…if you dont have the $$$ for the 1st 12 months of payments you probably shouldnt be buying the house.

[powayseller]

So the steeper the fall in the market, the greater the number of payments they can tack onto the purchase price…Interesting.

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