what does this mean?

*Assuming a $90,000, $120,000, $180,000, $240,000, $300,000, $360,000, $420,000, $510,000 or $600,000 adjustable first mortgage loan with the borrower selecting the minimum monthly payment option of $299.61, $399.49, $599.23, 798.97, $998.71, $1,198.46, $1,398.20, $1,697.82 or $1997.43 at an interest rate of 6.103%, a 6.207% APR and a buydown at the cost of 0.750 points. The monthly payment is fixed for the first 30 days and will adjust monthly thereafter. The minimum monthly payment option is calculated by amortizing the loan balance over the remaining term of the loan at an interest rate of 1.250%. By selecting this option, the loan has the potential for negative amortization. The minimum monthly payment option is subject to recasting every 5 years or if the principal balance reaches 110% of the original loan balance. The borrower also has the option of making an interest-only payment or making principal and interest payments amortized over either 15 or 30 years. For example, if the borrower selects to make principal and interest payments amortized over 30 years, the monthly payment will be $537.65, $716.87, $1,075.31, $1,433.74, $1,792.18, $2,150.62, $2,509.05, $3,046.71, or $3,584.36. These terms are available for first mortgage loans. To qualify for this monthly payment, the property must be owner occupied single family residence and a loan-to-value ratio of 80%. Credit restrictions may apply. Rate is variable and subject to change daily without notice.

Re: what does this mean?

I read this, kind-of , to my DH who works for a bank and deals with business. This sounds like a loan that with the minimum payment will have you owing more for the loan then you started with. It is called an OPTION ARM. If you pay the minimum it is not even the entire interest. If you have more questions post on Businesses helping Families. He is a vendor and will be happy to help you.

Re: what does this mean?

thats what it looks like to me too.

if you are paying less than the requied interest payment, that "extra" you didnt pay is added to the principal balance of the loan, so you can end up owning more than you borrowed.

seriously, some lenders need to get their heads on straight!

Re: what does this mean?

thanks ladies, I was just on the internet and saw this ad for a mortgage that I knew was too good to be true, and that there had to be a catch. These were the "terms and conditions" listed on the bottom of the page in teeny tiny print - but it didn't make sense to me, so I was wondering what the scam was!