Five Tips to Get you the Home Loan you Deserve
Written by Susanne on March 25th, 2008
Every day I get calls from desperate homeowners facing enormous payment increases on their home loans. They were caught in the recent “buying” and “refinance” frenzy and accepted a subprime or Alt-A loan, not realizing there may have been other loan choices available. Ouch!
What can you do to ensure that doesn’t happen to you? The best defense is an educated offense: learn what you need to know before shopping for a loan. Here are five tips that will send you safely on your way:
1. Get an A+ in Real Estate Loans 101
Do you know what a subprime or Alt-A loan is and why it is less desirable than prime?
Subprime or Alt-A loans are for borrowers with less than stellar credit histories, have minimal equity or no cash down payments and/or cannot document their income. Rates and costs on these loans are often higher, payments are often adjustable and there may be prepayment penalties that take homeowners by surprise when they decide to sell or refinance.
2. Know your credit history
It’s a really good idea to review your credit report annually, especially if you ever plan to apply for a home loan.
You can order a copy of your report from Equifax www.equifax.com , Experian www.experian.com and Transunion www.transunion.com. Clear up any issues before obtaining a loan. Ask your lender how your credit affects the price of your loan and what you would need to do to obtain a better loan.
3. Shop loan products and programs
You may be surprised to learn that lending requirements differ from lender to lender. Just because you qualify for a subprime or Alt A loan at lender A doesn’t necessarily mean that lender B will agree.
Don’t limit your shopping to brokers and banks, either. You may be surprised to find that credit unions may offer you a better product, rate and fees based on your needs and goals.
And don’t fall for the first sales pitch you hear; keep shopping because you may find something better!
4. Read the fine print
OK, I know trudging through all that tiny print may be tedious, but a home loan may be the biggest single financial transaction you’ll ever make. It’s well worth the tedium to examine the numbers and ask for an explanation of all the fees and conditions.
5. Remember your right to cancel
Most loans include the Right of Recission, meaning you can cancel the loan after signing within 3 days. If you realize you made a mistake, you have the right to get out of the loan within that time frame.
All of these tips can save you a tidy sum over the life of the loan. So make sure you get the loan you deserve by becoming an educated borrower!
