I live in MA, which typically requires a lawyer. I’ve done closings at lawyers’ offices, in my home, online, and via power of attorney, where my lawyer signed whatever we hadn’t already signed.
In terms of risk, if you are going with a well-known name, you are probably OK. If you are going with a random mortgage broker, you could end up with a different servicer when they immediately sell the loan. Make sure that you press them to disclose all fees up front, and look at the document they send you to make sure they don’t add anything they didn’t tell you about.
When we refinanced last year we FaceTime’d with our lawyer from inside our house while she stayed in her car in our driveway to watch us sign everything we had to. Kinda funny but what a dumb process.
I have only had Canadian mortgages, so rules and practices might be different. Here there is a standard prepayment fee you pay to break the mortgage, and its based in the differential in current vs legacy rates and the amount of your outstanding loan. But it can still be worth it - you lock in the new lower rates for a new term, and you get some flexibility to lower your monthly payment if you want to. If you have any higher interest rate debt it can really be advantageous to refinance the mortgage and even increase the mortgage a bit to access equity in your home to pay off they higher rate debt. This basically converts the consumer debt interest to a more favorable mortgage interest rate.
Here in lol america, there is no prepayment penalty for residential mortgages. I’m not sure exactly how it works but I believe this is a function of the federal government effectively guaranteeing all conforming mortgages, which are packaged and sold as bonds. No bank anywhere will lend money for 30 years at a fixed rate, securitization makes it possible and the government guarantee creates crazy low rates.
This is one area where the consumer (at least ones who can afford houses) truly gets an incredible deal. In my opinion it’s insane not to lever up at a 2% partially tax deductible interest rate. Also in many states mortgages are non recourse, so if you default they can’t take any of your assets other than the house to satisfy the debt.
Ripping off customers is a winning business model if the service is a one off transactional service (like buying a car or house) or if there is a massive informational asymmetry so customers don’t know they’re getting ripped off (think broker dealer models or high cost mutual funds with embedded fees).
I got hosed by this when I was younger. Figured my workplace would never invite these people in to pitch the products if they were not above board and a good deal financially lol.
IMO the problems with permanent life are actually an agent problem, not a product problem. That is, it theoretically could solve some problems for some people but in practice it is too opaque and is fertile ground for bad brokers to sell the upside and hide the downsides. I so largely agree with you though, simply because permanent life is often so easily outperformed by a combo of lower cost solutions.
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