0% interest isn’t always better

The allure of a 0% mortgage can be tempting, especially in a market where every penny counts. However, before jumping into what seems like a dream deal, it’s crucial to understand why this type of financing can be a very risky way to buy a home. At First Financial, we want to ensure that you make informed decisions about what is more than likely the biggest purchase you’ll ever make – your home.

The Hidden Pitfalls of 0% Mortgages

While the idea of a 0% mortgage might sound appealing, it’s important to recognize the potential downside. One major issue is that a 0% offer may come with strict terms that lead to unexpected costs. For example – missing just one monthly payment could result in a sudden increase in your interest rate, along with additional fees and penalties.

Moreover, 0% mortgages can encourage you to buy a home you may not be able to afford in the long run. Similar to buy now, pay later deals – you may be tempted into making a significant financial commitment without considering the long-term implications. This can be particularly risky if your financial situation changes or if the housing market fluctuates.

The Return of a Risky Financial Tool

The reintroduction of 0% mortgage programs is reminiscent of the risky financial products that contributed to the 2008 financial crisis. Zero percent mortgages typically allow first-time homebuyers to secure a purchase with no money down, which becomes an attractive option for those without sufficient savings for a down payment.

Such mortgage offers often include hidden catches. For instance, many of these deals require you to borrow a small percentage of the home’s value as an interest-free loan, which needs to be paid back in full when you sell the home, pay off the mortgage, or refinance. This could pose a significant financial burden if your home’s value doesn’t increase as expected or if you face unforeseen financial challenges. As we have seen before, the housing market does not always go up. If your gamble doesn’t pay off, you’ll end up owing more than the home is worth, and if you have to sell your home due to financial hardship – you’ll owe that initial loan in a time when you need money the most.

Avoiding “Too Good To Be True” Offers

It’s crucial to remember that if something sounds too good to be true, it probably is. 0% mortgages may seem like a great opportunity, but the risks often outweigh the benefits. Instead of falling for this type of home loan offer, consider seeking advice from trusted mortgage experts.

At First Financial, we offer video chats and phone calls with our mortgage experts – with no commitment required. You can also sign up for our homebuying text alerts to stay informed about mortgage rate changes as soon as they happen.* Our team is here to help you make the best financial decisions for your future.

Don’t Navigate Home Buying Alone

While 0% mortgages might seem like an easy way to buy a home, they come with significant risks that can jeopardize your financial stability. By understanding these pitfalls and seeking expert advice, you can make more informed decisions regarding mortgage financing.

For more personalized assistance and tailored solutions call 732.312.1500, visit a branch, or explore our services online.

*The Text Message Signup box must be checked in order to receive text messages. Standard text messaging and data rates may apply.

If credit card interest payments were merely a matter of mathematics, 0% interest would be a no-brainer. Given a choice between paying interest or not paying interest, of course nobody would choose to pay, would they? Common sense says paying ZERO dollars in interest is the best possible way to borrow money. So, why should you think twice before agreeing to a 0% interest credit card or balance transfer promotion? Two words: Fine. Print.

All that glitters is not gold.

There’s a marketing proverb that says, “Sell the sizzle, not the steak.” And make no mistake, 0% offers are most definitely sizzle! If utilized properly, these promotions can save you money. But if you don’t pay close attention to the details found in the fine print of cardholder agreements, those offers could wind up costing you more than you wanted to pay (which is sadly, often the case). With so many credit card companies offering 0% interest cards and balance transfer promotions, it’s difficult to compile an exhaustive list of potential pitfalls. So, rather than trying to cover all the caveats, let’s focus on the features that, if ignored – could quickly take the shine off any promotional offer.

Transfer fees.
In many instances, transferring a balance from one credit card to another involves a fee (usually ranging from 3-5% of the balance). Depending on the amount you transfer, this additional fee could significantly lessen your overall savings. Not every balance transfer promotion includes a fee, so do your research before you accept an offer. It’s never fun to discover unexpected fees after you’ve already committed to an offer’s terms and conditions.
Steep interest charges after the introductory period ends.
0% interest is a good thing. But unfortunately, the adage is true. All good things must come to an end. Most of these promotions include a limited-time introductory period of 0%, after which, the remaining balance will begin accruing interest—often at a high rate. If you plan to pay off your entire balance during the introductory period, the transfer can be a huge benefit. However, if you’re planning to carry the balance forward (or if you forget to pay your balance off before the 0% ends), it’s best to know when the interest charges will start and how much they will be. Once again, reading that cardholder agreement and fine print is key. After the 0% introductory period ends, some of these credit cards can have an APR of nearly 30% – and if your balance isn’t paid off by this time, you could be charged that insanely high interest rate for not only what you have left to pay off, but what you transferred over in full in the first place. We can’t say it enough: before you open a 0% interest credit card, be sure you understand the terms and conditions in full.
Higher interest rates on new purchases.
Be careful. The 0% interest rate on your transferred balance also rarely applies to new purchases. The major credit card companies are in business to make money, and interest charges are their primary source of revenue. By charging a higher interest rate on new purchases, credit card companies can offset the interest they’re missing over the course of promotional introductory period. So, before you start racking up charges above and beyond the balance you transfer, take time to know exactly how much interest you’ll be paying.

First Financial’s Visa Credit Cards offer benefits that include higher credit lines, lower APRs, no annual fees, a 10-day grace period+, rewards (cash back or on travel & retailer gift cards), an EMV security chip, and more!*

Click here to learn about our credit card options and apply online today.

*APR varies up to 18% for purchases, when you open your account based on your credit worthiness. The APR is 18% APR for balance transfers and cash advances. APRs will vary with the market based on the Prime Rate. Subject to credit approval. Rates quoted assume excellent borrower credit history. Your actual APR may vary based on your state of residence, approved loan amount, applicable discounts and your credit history. No Annual Fee. Other fees that apply: Cash advance fee of $10 or 3% of the total cash advance amount—whichever is greater (no maximum), Balance transfer fee of $10 or 3% of the balance—whichever is greater (no maximum), Late Payment Fee of $29, $10 Card Replacement Fee, and Returned Payment Fee of $29. A First Financial membership is required to obtain a Visa® Credit Card and is available to anyone who lives, works, worships, or attends school in Monmouth or Ocean Counties.

+ No late fee will be charged if payment is received within 10 days from the payment due date.