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How to Get the Best Home Loan Possible
You deserve only the best home loan deal. Here are some tips to help you get the best mortgage deal possible.
Mortgages are not created equal. The home loan industry is thriving these days, with lenders offering various types to fit different financial circumstances and needs. The competition in the industry is just as tight that lenders are in the lookout for potential borrowers who would like to get a mortgage.
If you have looked around online for good mortgage deals and have signed up for a few sites, do not be surprised to receive email offers almost immediately after signing up. What you should look for is the best home loan deal that you can get given your circumstances. You wouldn’t want to pay higher rates or pay unwanted fees. But even if this is the case, be very wary about the oh-so-attractive loan offers you see in the mail. Use your instincts, be a smart borrower, and get the best deal you can possibly get. Here are some steps to help you find the best deal:
Know your credit rating and your credit score. Many people are not aware of the fact that their credit standing has a good bearing on their home loan deal. It is a good idea to get a copy of your credit standing as it can be a useful tool in negotiating for the best loan so that you do not end up paying more than you should. If you have credit report mistakes, immediately correct them before applying for your loan.
Be careful when using your home equity to consolidate debts. Though debt consolidation is almost always a good idea, doing so against your home can pose bigger risk. This type of loan may be useful but missing out on your repayment may get you at a higher risk for foreclosure.
Shop around for a good deal. There is no harm in shopping around for a good deal. You can contact three or four potential lenders, ask pertinent information, and then compare their home loan offers. What you should look for is the lender which can offer you the best interest rate, loan term and those which can provide you with the excellent service you deserve. You should also pay close attention to closing costs and fees that they charge. Remember that you should never base your decision only on monthly payments. Some companies do charge low monthly fees but impose hidden fees or balloon payments which can either cost you more in the long run or will be difficult for you to pay in due time. Also, be very wary of those who will ask you to pay upfront fees before actual negotiations have been talked about.
Close your deal with caution. Once you have chosen the lender and the type of deal you think is best, make sure that you read all the home loan papers before signing them. Make sure that you understand everything written and that what is reflected in writing is the actual deal you talked about. Be careful of lenders who will rush you into signing. If in doubt, do not sign the home loan deal!
Cars and Credit Reports
The Problem
I was driving home from the store the other night when I noticed a license plate that made me laugh to myself and then I proceeded to feel sorry for the poor sap driving. The plate read “0 DOWN”. It was a white, shiny, new Ford Explorer (probably an 06′). Here’s what really got me about the caption: Not only did this consumer purchase a brand new vehicle with no money down, but he was proud of it. DUMB! Commercial advertisements and society as a whole embeds the “Buy Now, Pay Later” method into our heads and it works so well that around 90% of all consumers who purchase new cars do not put $5 down on the vehicle before signing the papers. The sad fact is, is that the average new automobile loses $3,000 as soon as it leaves the lot. Technically, you have gone into debt for something that loses value before you even use it. As if this wasn’t depressing enough, the less money you put down on a car and the worse off your credit is, the more you pay for the car. If this isn’t one big sand trap I don’t know what is!
The Role of Your Credit Report
Your online credit report is affected 2 ways when you buy a new car with no money down. First let’s look at the role it plays after you decide you NEED that shiny new sports car. The mass majority of consumers are thinking of one thing when they sit in the ‘sales chair’ to go through the paperwork: driving the car home (man this is bringing back some bad, bad memories). In order to do this you will need to finance the vehicle which requires pulling up your credit history and your credit report. This can easily be done online right in the sales office while you look around to make sure no one else tries to sneak off with your new toy. The worse off your credit report is, the higher interest rate you will pay. (This is fine though as long as you can still afford to buy food every other week and pay a few bills here and there.) The other role that your credit report plays in this game is the after-effect. The average new car buyer’s car payment is 25-30% of their total income. This creates a nice, big road block on your credit report in itself for when you are ready to make another large purchase. Not to mention when you fall behind on even one payment and your credit file takes a hard blow. Try to keep these factors in mind next time the kid in you tries to make a financial decision.
The Solution
Well you’re not going to like the best solution but here it is anyway: PAY FOR THE CAR IN FULL! If you saved the car payment every month in a good money market account; not only would you save time and money, but when you walked into the sales office with piles of hundred dollar bills you would get quite a deal! Okay, so you’re more likely to win the super lotto than do that right? Well here are a few ideas. As long as you practice a few you might get ahead of this nasty game a little bit or at least protect your online credit report. First, consider getting a 2 or 3 year old car. You can still get a shiny one and the previous owner will have taken the major depreciation of the vehicle passing the savings directly to you. Second, if you can, try waiting and searching to find the best deal possible. Trust me, there is more than 1 of those cars in the market. Third, put something down. Anything! For starters you could put down 10 to 15%. This will lower your monthly payment, lower your interest rate and maybe even cut your payoff time down. Lastly, get a bargain. Don’t settle for the asking price by any means. Be patient and keep control of your focus. One definition of maturity is learning to delay pleasure.