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. |
