The Mole
The Mole is an anonymous CFP giving us the inside scoop on the financial advisory business. Item #4 is perfect for mortgages too!
4 Always know what you are buying. As a general rule, the more complex it is, the worse it is for you.
This is so true. Option ARMS are complex and really are a poor choice for MOST borrowers. Yes, it may be appropriate for a few but for the majority of borrowers, it’s a bad idea. The mortgage industry pushed this product for its low start rate because they knew that borrowers would believe it was their actual rate. They also pushed 3 year pre-payment penalties because the loan broker made more money on that product even though it was not in the borrower’s interest to sign up for that. If it’s very complex, difficult to understand, etc., beware.
