Question: If it was stated as a lower interest rate, it was a lie.
> I honestly believe that there was a communication breakdown with the OP and >the sales person, but no your interest rate is not lowered up front. > I have paperwork SOMEWHERE, that shows what my interest rate will be at the >end of the loan, following the plan I have in place now. Basically, it takes a >7 percent loan, and lowers it to like 3.4 percent. > If I find the paperwork, I can be more specific.
Answer: No way do you have an effective interest rate of 3.4% … at least not in the US or most other countries with which I am familiar. I have no idea what the home loan rates are in Japan where they are in a period of deflation but even there I doubt the rates are that low.
While the total amount of interest paid will be lower, the interest rate itself is not affected by accelerating your replayment schedule. The interest rate itself may be lowered if you pay more points up front or take the loan for a shorter term … you also can get a lower initial rate by taking a variable rate loan since you are assuming some of the risk of future rate increases in the general marketplace.
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