This shouldn’t be shocking news to you… Banks are in the business of making money. And now they are finding new ways to prey on people that may be in a desperate situation through a new product called a cash-back mortgage. The bank will actually give you cash up front on a mortgage to use however you want, except as the down payment on your home. You can used it for moving costs, closing costs, or any other expense. The following article does a great job of explaining just how costly this loan can be.
Cash-back mortgages: A deal from your bank that regulators are not keen on
According to the article, you may be paying as much as 2% more than you might get negotiating terms for a mortgage with your bank. Under the example given, a $20,000 cash-back mortgage would cost you $40,000 in interest. What’s even scarier than that is that industry insiders are aware that this money somehow gets used by consumers for the down payment. And nobody seems to care. I would hope to see regulators take a closer look at this loan product. It sounds like nothing more than a higher end payday loan if you ask me. If you’re in need of a mortgage debt settlement attorney, contact Gamez Law Firm for a free debt consultation.