The BIG Smoke & Mirrors loan—SMART Loan.
If you want to pay your mortgage off in 20 years, the mortgage industry (including Citimortgage) has something to accommodate that—it's called a 20 year mortgage. I wish I had the time to go through the numbers right now, but you all can check it for yourself. Run any SMART loan scenario’s total annual payment (including the 26 payments) against a 20-year fixed loan with a “normal” interest rate and you’ll find that the regular old 20 year loan will have a lower:
total payment to finish the loan
fees to get the loan
NO pre-payment penalty
Comparing to a 30 year loan, the SMART loan will accelerate the payment, no question about it. Do you HAVE to have a 30 year loan to begin with? NO!!
Also, the simple interest thing will DESTROY you if you’re ever late. The same power of simple interest saving you money when you pay bi-weekly, hurts you when you miss a payment. The interest compounds DAILY.
So, if anyone’s argument is that the client doesn’t want to be “committed” to a 20 year loan, here’s my rebuttal:
If they can’t afford my 20 year theory, they can’t afford your bi-weekly payment either. They can always get a HELOC in case times are tough and they can’t make the payment. It’ll be a lot cheaper than adding simple interest to their mortgage, NSF fees at the bank and being locked up by HUGE pre-payment penalties.
THINK OUTSIDE THE BOX
As for the “opportunity”, anyone that is bright enough to beat the enormous attrition rate that Primerica has can easily get a job that pays a salary. The person won’t have to annoy their friends and family trying to recruit them and finally will be able to offer clients less expensive products, with better features.
Monetary Loss: $100.