Subject: Re: Re: Re: Re: Re: Re: Primerica - simple interest mortgage confusion

Comments:
: How well I know, Ken--was recently offered a job in Boston making about what I do now--cost of living is a bit higher in that area... : Here 300k is a very nice house; actually its probably more than that, but its just a guess of course. Point being that my old RVP still lives with his parents after his divorce, and my mortgage broker, who is within about 10 years of his age is in much better shape... : : TO: KEITH : : FROM: KEN YOUNG : : It all depends upon the location of that $300,000 plus home is located too. : : A $300K house located in New York City won't even buy you a tenement flat in the slum section of lower Manhattan. : : A $300K house on Miami Beach won't hadly purchase the land you want to build a home on. : : A $300K house in Los Angeles may only buy you a wood frame 50-year old 1,000 square foot two bedroom one bath home. : : $300K for a house will purchase you a Intercoastal Waterway 2,500 square foot home four bedroom three bath double car garage plus a large family room home with a spectacular view of the Gulf of Mexico here on Padre Island with a appraised value now of $340K in just one year on the water, a boat dock, and a fishing deck with an outside kitchen under a gazbo. : : Come on down to South Texas and discover America's last frontier of reasonably priced waterfront property located in a Semi-Tropical climate. : : If I had built the same house on the waterfront property I owned on on the West Coast of Florida, the total package would be appraised at $1-million. I sold the land and moved here. : : The point of the issue is, a home owner living in an area that is reasonably priced may think that $300K is a lot of money where on the other side of the coin, a $300K home may be nothing to brag about. The home I own may only cost cost on the Gulf Coast of Alabama or Mississippi $150K. Everything is relevent. : : Elvis Presley's daughter sold her waterfront home in Clearwater Florida for $6-million. The same house here on Padre Island may cost $750K and on Star Island on Miami Beach $10-million. : : Bugsy Siegle the ganster purchased his home in Hollywood, California (Beverly Hills) for $50K from the movie opera singer Lawrence Melchior and today it would cost in the millions but everyone told Bugsy that he must have had a hole in his head to pay $50K for that house, if you get the messsage to this last quip. : : : : : The two points they push seem attractive if you know nothing or next to nothing about mortgages (I didn't at the time I was with Pri). : : : First, all mortgages are simple interest. On standard mortgages the ammortization schedule is fixed when you get the loan. Additional payments are appled to the "back end" of the loan, or the last payment first, so that the interest amount does not change. they claim that their loans are re-amortized on a daily basis, so in essence you dont pay interest on the money you no longer owe. Sounds great, but as Steve indicated, the overall savings is nothing like what they lead you to believe. : : : Second, they claim they will not re-age your loan out to another 30 years, but will only keep the years you have left on your current mortgage. It seems as if this is a big variable and not followed by all offices. In any case, with the higher interest rates and VERY high pre-payment penalties (which you almost never see on loans made to borrowers with good FICO scores...) your savings may amount to zilch. : : : Talk to a real, qualified mortgage broker before you make ANY decision. Consulting one now for my own mortgage refi who has a boatload of diplomas on his wall, including CFP...BIG difference in knowledge level from my old RVP....but then this guy probably couldnt recruit 10 people per month and has no time for ra ra meetings...guess hes not a winner (of course his $300k+ house would belie the winner comment...lol). : : xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx : : It simply amazes me how with a few months in the insurance and financial services business, with no formal training or education in the subject matters either, these naive "Dorks" (the uninformed) can lead themselves into believing that they are qualified to talk about insurance and motgage financing matters based only upon what their RVP's are telling them. : : I guess that the RVP's have no idea of what they are training their agents to say because they also lack the appropriate trianing in these areas also. : : So all we have is a group of "Dorks" falsely leading consumers into believing that what these "Dorks" orchestrate as "Gospel" is ony based upon "heresay". : : Who suffers? Quite naturally the consumers who have fallen for their rhetoric. : : I am totally convinced that the only reason these "Dorks" hang on is two-fold. One is the fairytale about their chances of reaching that six-figure income, and the other fairytale is building and owning their own business. : : Ken Young : : xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx : : : : There are too many factors that have remained unanswered. : : : : Example, after mailing in a payment let's assume it takes three days to wind up in their lockbox. How often is the lock box opened? Once a day, twice a day, once every other day, twice a week, once a week? : : : : Next question one the courier takes the envelopes back to the mail room, how long does it take for the envelope to reach the accounting division's desk? How long does it take to be opened and then posted to the account? : : : : Now with each payment it includes a higher rate of interest than can be normal acquired elsewhere, isn't it true that with each posting due to the higher interest rate the lending institutions gets to keep more of the payment in interest and a lesser portion of the payment is applied to the principle? : : : : Why is their always an early payoff penalty? I have been told that the early payoff penalty runs for five years. Why doesn't most other lenders not have early payoff penalties in their mortgage contracts? : : : : Why has it been reported over and over again that the "Dorks" (the uniformed) do not make full disclosure to their intended victims informing these people that there is an early payoff clause? : : : : Nope, as for me, if I were in the shoes of a consumer wanting to refinance my home and borrow enough money to pay off my debts and or consolidate my debts, I would do so, but that extra one-monthly payment I make by paying one half of the monthly mortgage payment every two weeks, I would tell the mortgage company to apply that extra money to the back side of the mortgage note thus not only paying the mortage off sooner that expected, but also building up my equity in my home much faster. : : : : Ken Young : : : : xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx : : : : : They do compute their interest on an average daily balance. This is so that "early" payments get applied early instead of on the first of the following month. This has an effect, thoughbeit a very very small one, on your payoff schedule. Mainly, they're trying to set you up on their bi-weekly payment system. They usually will tell you that the system is MUCH more "powerful" this way. In reality, the simple interest only plays a small part in the overall equation. It is definitely *NOT* worth the 1+% in interest rate they will try to get you to take. The "simple interest" facet, by itself, is only equivalent to a small fraction of 1% when all is said and done. Any benefit not immediately wiped out by the higher rate will be wiped out by your prepayment penalty and the high, high closing costs. : : : : : Be careful!!! : : : : : : : : : : : I am at a loss to figure out what in the world one of Primerica's agents is trying to tell me... : : : : : : The agent keeps telling me that Primerica is the ONLY company that offers simple interest loans - what?????? As far as I understand - every mortgage I've ever had has been simple interest and every car loan as well - meaining I only pay interest on the principal sum (not compound interest - like a credit card). She tried to tell me that since they are the ONLY company to offer this special type of loan, people have to pay a higher rate, but of course it pays off. WHAT???? : : : : : : Am I wrong here???? The agent is unable to actually tell me what in the world is so different about her loan, since she has no background in finance, nor has the agent ever attended a college course. Obviously I would never give her any control over my finances, but I am unable to even figure out what she's trying to sell me. I have a standard 30-yr fixed rate mortgage. Isn't it a simple interest loan?

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