The Mortgage Brothers Show

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Beware of Low Mortgage Rate Ads

04-18-2011About MortgagesEddie Knoell

Borrowers should be aware of ads for Arizona mortgages that offer very low rates because they may just be teaser rates to get you to look at their loan products. You know the old saying, “if something sounds too good to be true, it probably is”. That is good advice when it comes to choosing a mortgage product. In fact, many banks advertise their best prime rates, but those are not the ones that you may end up with. It is nearly impossible for banks to advertise a set fixed Arizona mortgage rate for all Arizona borrowers because rates depend on your creditor score, credit history, the type of property you are purchasing or refinancing and your income, debts and assets.

Negative Amortization Loans and ARMS

Ads that offer really low interest rates are probably negative amortization loans that have very low monthly payments, but you never get the interest or principal paid off. Adjustable rate mortgages (ARMS) offer borrowers lower rates during the first few years of the loan, but then they can adjust and reset to much higher rates, especially if mortgage rates are going up. You could end up with a monthly payment that you cannot afford. If property values decline, you would also be upside down on your mortgage because you would owe more than the home was worth. That is what happened to sub-prime borrowers who started defaulting on their Arizona mortgages. They could not afford their mortgage payments that rest to higher rates, they lost equity because home values started plummeting and many lost their homes to foreclosure.

ARM’s work well for investors who purchase a foreclosure or short sale property, rehab the property and then turn around and flip it or when interest rates are going down. If you plan on keeping your home for more than five years, a fixed rate mortgage is a better choice.

Mortgage Broker

Working with a reputable and knowledgeable Arizona mortgage broker to find your AZ mortgage is a good idea because the broker does business with a variety of lenders and can help you shop for the best Arizona mortgage rates. The broker will assist you with preparing the application and gathering the required financial information to submit to your lender. The lender recognizes the value of a mortgage broker because they know that the broker has already screened your credit and made the determination that you meet the lender’s lending guidelines. You have a better chance of getting your loan approved when you use an Arizona mortgage broker.

If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can email your questions to or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.


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Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.