"Fixed" Mortgage, Be Careful

Posted By Paul

I was listening to a story where people are getting mailings for fixed mortgages at a great rate. They get excited and quickly do the paperwork, and feel like they got a great deal, and then 6 months later their interest rate shoots up.

Why? Apparently mortgage companies can to refer to a rate as "fixed" and call a mortgage a "Fixed Mortgage" even if they mean that the rate is fixed for the first 6 months and then adjusts. If you're not careful and don't read the fine print, then you could accidentally sign up for an adjustable mortgage when you THOUGHT you were getting a fixed mortgage.

I actually received one of these mailing recently that had big letters declaring a fixed mortgage rate that was low enough that I got pretty excited. Once I read the mailing closely it was easy to find the part where it said that the rate will adjust, but I could see a situation where someone might get the mailing, see the phrase "Fixed mortgage" and the rate and immediately call to take advantage of it without actually reading all the info.

What's the moral? READ THE FINE PRINT, and be wary of anything that seems too good to be true.