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More money and finance tips from
Bankrate.com |
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Steer
clear of high-cost, high-fee loans
Avoid loans that roll a balloon payment, prepayment penalty,
mortgage life insurance or other provisions into one loan.
These loans often make the combined financial burden too much
to bear for average borrowers. More
Adjustable-rate mortgages
Adjustable-rate mortgages (ARMs) are favorable when rates
are going down or your salary is going up. Otherwise, each
rate adjustment can sting. ARM holders can reduce the impact
of worst-case rate hikes by saving money during the initial
low-payment period, buying down loan balances and budgeting.
More
Clean up your credit before shopping
for a home
Cleaning up your credit report before you're in the mortgage
process can result in better loan rates and terms. General
guidelines for strengthening your report include: paying bills
on time, limiting outstanding credit, closing out unused credit
cards, resolving outstanding bills and correcting inaccurate
information. More
Watch out for inflated appraisals
When you're buying a home, a property appraisal will determine
the mortgage's loan-to-value ratio. An inflated appraisal
may help you close your deal, but it also can trap you with
too much debt. More
Don't apply for too many loans:
Each time you apply, lenders request a copy of your credit
report. Frequent inquiries can be a sign of bad credit and
can adversely affect your credit rating. More
Getting the green for 'Green Acres':
The rules for financing farms or other rural properties are
different. Lenders are less plentiful, so expect to get a
higher down payment or interest rate than you would for a
mortgage in town. More
What goes up, must come down
Interest rates tend to move in cycles. After a prolonged increase,
a slow drop usually occurs. Savvy shoppers should keep track
of longer-term trends and wait to buy until rates decline.
More
Try Title One loans for home improvement
Title One home improvement loans offer a cost-effective way
to borrow. They often have lower rates and fees, more lenient
underwriting standards and no income limits. The improvements,
however, must be non-luxury items. More
FHA loans -- another perk for government
employees
Lawmakers want to provide more Americans with the opportunity
for homeownership. Teachers, police officers and other civil
servants particularly benefit from the modified FHA mortgages
with lower down payments and cheaper mortgage insurance requirements.
More
Give government loans a go
The government is improving its loan products to increase
homeownership and attract first-time home buyers to the FHA
program. It offers low down payments and liberal underwriting
standards. More
What goes up, must come down
Interest rates tend to move in cycles. After a prolonged increase,
a slow drop usually occurs. Savvy shoppers should keep track
of longer term trends and wait to buy until rates decline.
More
When you assume, you can save
Assuming an existing loan can slash your monthly loan payments
and save thousands of dollars in interest if the interest
rate on the assumable loan is lower than current rates. More
Go online for a home loan
Online lenders offer special promotions to beat out their
competition. Savvy shoppers can find and negotiate better
deals online. More
Online lenders
The battle between lenders increases when rates move up. Online
lenders offer special promotions to beat out their competition.
Savvy shoppers can find and negotiate great deals online,
leaving more money in their pockets. More
Predatory lending
You need to shop wisely for a mortgage to avoid predatory
lending. Abusive mortgage lending practices include fees,
terms and conditions that can force you into repeated high-cost
refinance transactions or foreclosure. More
Credit scores
Higher FICO scores lead to favorable borrowing terms. Fair,
Isaac & Co. will reveal the factors used to determine the
FICO score. More
Loan rates
The Federal Reserve Board raises interest rates to slow the
economy; it lowers them to give the economy a boost. Home
sales, construction spending, manufacturing and employment
factor into the interest rate cycle. More
Natural disasters
Early preparation reduces financial loss from tropical storm,
tornadoes, floods, wildfires and other natural disasters.
Insurance, home improvement loans to fortify against major
damage, and safeguarded paperwork help sustain homeowners
and businesses through disasters. More
Credit score
Credit scores are generated from your credit history and predictions
on how you'll behave based on thousands of similar credit
profiles. More important than knowing your score is knowing
how to improve it. More
Credit score
The practice of withholding credit information protects credit
card companies and subprime lenders from losing customers
to competitors. But unreported on-time credit payments adversely
box you into higher interest rates or refused credit. Make
sure your positive credit information is reported and keep
records of on-time payments. More
Subprime lending
Unlike the conventional mortgage market, the rates, fees and
program guidelines vary widely for subprime lenders, who offer
money to people with damaged credit. as each operates under
different underwriting standards. Subprime borrowers need
to spend more time shopping and hone their negotiating skills.
More
Pre-approved borrowers
Get pre-approved, rather than just pre-qualified, for a loan.
It will carry more weight in the negotiating process. More
40-year mortgages
The 40-year mortgage reduces monthly payments if you need
more help purchasing a home. But it also has major drawbacks
-- a radically higher interest bill over the life of the loan
and a much longer time to build up equity. More
Phone solicitations
If you don't want to receive mortgage or equity loan solicitations,
you can contact the Direct
Marketing Association and the credit
bureaus. These organizations maintain lists of people
who don't want their names, addresses and credit histories
used or analyzed by direct marketers. More
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