Beware of mortgage loan ads that speak with forked tongues

I'm driving in the car to the vet this morning with a sick dog, listening to the radio, and was astonished by this terrible ad I heard. A local mortgage refinancing company was advertising how a home equity loan was a great way to pay off your holiday bills, and that their rate was a low, low, low "two point zero percent" below the prime lending rate.

Their big comparison was that if you needed to get $50,000 out of your home, your loan payments would be a low $175/month which "is surely lower than the bills you're paying on those ridiculously high percentage credit card debts".

But what's missing here are two critical facts, as usual:

1. What is the actual interest rate of the loan?

2. How long is this loan going to be for?

I calculate that if you just paid $50,000 at $175 month without ANY interest that it'd take you 286 months, or 24 years to pay the loan off. Add annually compounding interest and it sounds like you're getting another 30 year loan, or even worse. NOT a good deal at all, is it?

But what most bothers me about the advertisement is how it emphasized that sweet sounding "two point zero percent" with the "below prime rate" slipped in almost as an afterthought. I can just imagine all these people eagerly calling up the company and asking about the "two point zero percent" loan, just to find that they're actually talking about (I'm guessing) the WSJ Prime Rate (which is currently 5.25%) which means the loan's at 3.25%, not "two point zero" at all. And what about those closing costs?

In any case, it's another wonderful example of why it's critical that you listen carefully to what they say in these advertisements and make sure you're fully informed of the details before you even think about pursuing any sort of loan of this nature.