Be Aware of Low Rate Mortgages
Advertised |
By John R. Blakefield |
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You see every where rates advertised for low mortgages. Banks,
private lenders, brokers, mortgage companies and other institutions
advertise their lowest rates to bring interested buyers in to the
store, or call, or go online to see what that particular lender has
to offer.
While these low rates are not false, more often
than not the rates advertised are for those with great credit
history and a steady income. The average person may not be able to
take advantage of these low rates because their credit history is
not as good and they have way too much long term debt. In that case,
there are rates, often higher, that are for those with not as clean
credit.
Another thing to look out for is the low rate
advertised might be just the base rate. An interest rate is made up
of a base index, then added to it are percentages that represent the
risk that the lender is taking on by loaning you the money. Some
risk that is included would be default risk and inflation.
If
you are drawn into a situation where you wish to take advantage of
the low rate advertised, be sure to talk to the lender in depth and
see what the real deal is with the rate. Don't rush into a deal
where you are thinking you are getting the advertised terms, and
really you are getting the terms that better represent your credit
history.
In order to avoid this happening, have a clear
understanding of your financial environment. You can do this by
getting a credit report and making sure all the items are correct.
It is common to have mistakes on your credit report, so make sure
all financial responsibilities are your own. It can be detrimental
for your credit score if you have a false item on your report, and
you don't even know!
Another thing you can do is do a basic
income and expenses of your household. Literally go item by item and
determine your total income versus your total expenses. Also, check
out your long term debt. You should be able to determine if you are
capable of handling a mortgage payment over the life of the term.
When you approach the lender, whether it be by phone, in office, or
online, be prepared with all this information that you have. Make
sure the terms you get are representative of the information you
have to give to them.
Don't fall for the advertised interest
rate, and never sign or agree to anything you have not looked over
very carefully and understand all the terms, fees, rates, and
conditions. The advertised interest rate is meant to do just that,
advertise to get people to come to the lender.
Bottom line,
don't expect to get the advertised rate. Always double check to see
if there are other percentages added to it. Many times they are
advertising just the base rate. Cover all your basis and be prepared
to ask questions. Do not fall for smooth salesmanship and a quick,
persuasive tongue. Be prepared and go in with confidence. |
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