A reader sent in a mailer about an offer from MiLEND for a new mortgage. MiLEND appears to be all licensed and registered so for once that’s not the issue.
The offer appears to be legit and for a new mortgage and cash back “to use any way you like for just an additional $101.18 per month.” But this is a 30 year loan offer so that $24,000 is only going to cost up to $36,424, or more, if all the payments are made.
The offer was a great opportunity to look at the advertising, because that’s all this is, and see what the fine print says.
As you can see the offer appears to be for a new mortgage of $155,000. The letter even says “Under the specifications of this program your $155,000 mortgage would have a new payment of $653.49 or less.*”
Below that section there is a more prominent table that lists details on the new proposed mortgage in bold. However it appears the asterisks are so small as to nearly eliminate them from human vision. Rather than an asterisk it looks more like a speck. Granted the asterisk next to the original statement in the advertisement letter is bigger. So why can’t they all be that big?
Well the asterisks are all very important. They are intended to direct the consumer to read additional information about the facts presented. Basically, qualifiers for the pitch made. This is not a unique process of MiLEND but any offer. The MiLEND letter is just a good example to talk about it.
If we look at the fine print at the bottom and back of letter, shown below, we learn some very important facts.
The fine print paints what I think is a different picture that what is gleaned at first casual glance.
We learn this is not a fixed monthly payment. The payment after five years is going to annually adjust. If interest rates go up, which they most probably will over 30 years, your monthly payment is going to go up.
The payment does not included any amount you have escrowed like taxes and insurance. Don’t think the monthly payment proposed is going to be the full monthly payment is you normally have your lender escrow those amounts. That will be on top of the loan payment.
You have to have at least 20% equity in your property and there is no indication how credit score will impact the proposed rate. It’s not till we get to the back that we learn more.
The back tells us that even though the letter says MiLEND is making an offer to extend you a new mortgage, the offer is not a “Commitment” to do so. It also says MiLEND might not even be the lender, “in some instance loans may be granted by a third party lender.”
The offer is subject to change at any time without notice and MiLEND will determine the amount of your loan, it may not be the amount shown on the front of the offer.
We also learn the estimated monthly payment savings are based on assumptions and not necessarily your real current mortgage rates. The letter says “estimated monthly payment are assuming a current 30 year mortgage and debt at 6% interest vs. a new 15 year mortgage at 3.25% and APR of 3.49%.”
Now that seems to perplex me since the front of the letter says the offer is for a 30 year term yet the back says the example is for a 15 year mortgage.
The lesson to be learned here is when you get an offer for credit in the mail, be sure to follow the asterisks and find out the details of what is being presented in the big bold type. The terms might be a lot different than you assume at first and you don’t want to be caught by surprise.
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