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Inflated
appraisal values: This will increase your
mortgage payment. Make sure the housing offer is
in-line with home prices in the surrounding area. |
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Subprime loan
rates: Subprime loans are usually given
to people with bad credit. They are a higher interest,
higher fee loan. It is not uncommon for people with
no credit to be given this type of loan. If your
loan offer is of a higher interest rate than the
posted “prime” rate from lenders such
as Wells Fargo or Countrywide Financial, it is probably
subprime. People with little or no credit should
ask about an Anthem Report from First American CREDCO
as a way to avoid subprime rates. |
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Interest only
loans: While these might look good on the
surface, beware of the fact that if the housing
market loses value, you could end up owing more
than your house is worth. Also, these loans are
usually at a fixed interest rate for 2-3 years,
and then switch to a variable rate after that. |
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Prepayment Penalties:
Some lenders may tell you this is mandatory, but
it is not. Look for a lender that will not charge
you a fee if you pay your mortgage off early. |
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Low rates, high
fees: Some lenders may get you into a loan
with a very low interest rate, but charge very high
fees in order to make up the difference. |
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Credit Repair
Companies: You may have seen commercials
from companies offering to “fix” or
“clean up” your credit record. These
credit repair companies often charge high fees for
items that you can usually fix on your own. You
can also enlist a reputable non-profit credit counseling
agency to help you fix your credit problems. The
next section contains information on how to do just
that. |
