Subject: Re: The Primerica "Simple Interest" argument

Comments:
: Simple interest makes a miniscule amount of difference over the life of a loan. This is especially true of the Primerica agent attempts to increase the borrower's current rate by more than 0.3%. Throw in closing costs and prepayment penalties, and you're way behind. : Here's what the mortgage professor says. Feel free to request the spreadsheets that will show the following: : ---- : The SOS make exaggerated claims for what they call a "simple interest biweekly". It benefits the borrower by reducing the loan balance on the day a payment is received. The benefit, however, is very small. : In the $200,000 mortgage at 6.60% referred to above, interest payments on a simple interest biweekly are $167, 306. This is only $543 less than when the monthly payment is increased by 1/12. You only have to raise the interest rate from 6.60% to 6.63% to eliminate the benefit. And if you raise the rate to 8%, which is actually on the low side of the deals promoted by the SOS, it is a loser big time.

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