Ok, I just went and looked at the kapfinancial recap of it. I'll concede that what they say is true...IFF (that is, if and only if) your spending habits stay the same.
While watching, one thing kept popping into my mind. What is in it for them? You do know that their goal is not "let's help the home owner pay off their house. It would be great for us if they did not pay us interest." right? So, what is in it for them? Here's what I came up with...they are counting on you spending MORE than you do now, so the principal balance never truly goes down. There is nothing that keeps you from spending more than what you put in that paycheck, so there is a real possibility that you will actually build your mortgage back up to that 90% home equity level.
Also, it never said, but it sounded like the loan would be variable rate. Mortgage rates are still at historic lows, but if this is variable rate, then wow that mortgage could get expensive.
You could do the same thing with a credit card if you had a high enough credit limit. But would you? Would you charge 90% of your house to your credit card, one with a variable rate, and every paycheck pay ALL of your money to that credit card, and then use that credit card for your expenses for the month? Hey, at least if you did that, you would get points for it. But the variable rate and the unlimited cap on spending (ok, a cap of 90% of the value of the home) scares the bejeezus out of me.
|