Introducing the 0.25% Mortgage Loan

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LEI Financial, a mortgage lender in California and Arizona is launching a new mortgage program that is unlike anything I’ve heard of, offering 0.25% Interest Rates.

According to LEI, “This loan gives the borrower a fixed interest rate of .25% for the first five years. The borrower pays the interest only for their monthly minimum payment for these first 60 months. . . It is a hybrid adjustable-rate mortgage, or ARM, designed for people who want to use the equity in their home to increase their cash flow. The minimum payment of the loan will be the fixed-interest only amount for the first five years of the loan, and then the borrower will pay the interest only payment based on the interest rate of the outstanding balance. This interest only period will last for the first 10 years of the loan.”

I’m all for creative financing, and this sounds like a great program for educated buyers/investors, but I fear that many people will get lured into buying otherwise unaffordable properties with loans like this one.

What do you think?

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.