Two Loan Offers in One Day!


Yesterday must have been my lucky day since I actually received two new loan offers in the mail. One was yet another "Personal and Confidential" notice with "Official Documents Enclosed" from Golden Oak Lending like I received in February. I love the fake check for $48,500 that comes attached to it that says THIS IS NOT A BANK CHECK. I also enjoy the fold and tear away edges on the envelope which I always like to fold and tear away since it is so fun. Then I recycle the crap in our recycled paper bag for pickup every week. I know I will never use these people, yet they keep sending me their ridiculous offers!

The second notice was a bit more interesting as it was from a more reputable firm, ING Direct, and it was for some new plan they called the "Easy Orange Mortgage." They make it sound appealing until you realize it is not much more than a adjustable 5 or 10 year mortgage that you repay on a bi-weekly schedule. They keep saying you get a "fixed rate" which makes it sound like a fixed rate mortgage until you read the part that says the rate is fixed for 5 or 10 years and then you can renew it (i.e. its an adjustable rate mortgage!) They also say you'll enjoy "super low closing costs" but they don't specify what these super low costs might be. Instead I had to go through their "Solutions Finder" calculator and enter the particulars for our current loan, home value and income to see what deals we would get. The rates they offered were indeed pretty good, but I decided to compare them to the exact same thing from the local St. Louis credit union we use, First Community, and also our current lender, Schwab Mortgage. On their special "Easy Orange" mortgage ING offered rates of 2.99% and 4.25% on their 5 and 10 year products and on conventional monthly paid ARM's they offered 3.125% on a 5/1 and 3.625% on a 7/1 ARM. First Community's 5/1 ARM had a rate of 5.00% so ING rates are definitely lower, but I also noticed their estimated "low" closing costs were $2161 versus about $1130 from our credit union (for the same $79,000 loan). The rates at Schwab were almost identical to ING's rates for the 5/1 and 7/1 and their closing cost estimate came in at $1872. So ING's "low closing costs" were actually estimated as higher than both my local credit union and our current mortgage holder. I suppose ING is able to offer the lower rates on the "Easy Orange" loan than on a conventional ARM because they know the borrower is accelerating their payment with a biweekly schedule so the loan is at lower risk.

In all fairness using the "Easy Orange" mortgage would have reduced our monthly payment soemwhat, but for the $2,000 in closing costs, and with our rate only about 1% higher than what they are offering, it does not make much sense for us on our smallish loan with a decent rate. For folks like us with current loan balances under $100K and a rate already under 5% these special "deals" are not worth it when we could just use the $2,000 in closing costs and reduce our loan balance instead for free with one electronic transaction. That is a lot more effective that using a bi-weekly schedule where you are permanently locked in to their particular acceleration schedule.

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