by Osman Parvez
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You’re probably getting the spammy emails or hearing the radio ads. They promise super low fixed rate mortgages and the possibility of avoiding a painful ARM reset. What they usually don’t tell you is how much you’ll need to pay in closing fees and points needed to buy the rate down.

Most of the time, you’ve probably never heard of the companies running these ads (although they use names designed to sound legitimate). But sometimes even well known companies use dishonest tactics. One approach is to promise you a lower rate to avoid an ARM reset. What they don’t tell you is that your ARM will likely reset downward.

Citigroup anyone? Here’s Mish with the story.

The take home message: Do the math. I’ll say it again. Do the math.

Although many lenders are honest, some are not. Do not trust your mortgage provider to do the math for you. Even legitimate lenders, like Citigroup, have marketing departments that can obscure the math (or worse, blatantly lie). Yes, it’s possible that current rates may be lower than your existing mortgage but just like when you first obtained your loan, you should shop several lenders. Consider the deals you are offered on an apple to apple basis using the same economics (points, fees, etc).

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