Before You Take Out a Florida Home Loan …
… read through these tips.
It can be a scary time to be on the lookout for a Florida home loan - Interest rates are on the rise and, with them, mortgage delinquencies are increasing.
With this state of affairs in mind, here are five tips for what you need to know if you’re out shopping for a loan.
1. Don’t believe everything you hear
Banks have been bending over backwards to offer mortgages to consumers with low introductory rates, teaser rates and all kinds of mortgage products from jumbo loans to hybrid adjustable rate mortgages. But these products are not always a good thing.
A class action lawsuit was filed in Milwaukee on behalf of homeowners recently that said they were misled by lenders. They believed they were locking in a mortgage rate of 1.95% for five years - instead the rate only lasted for 30 days. They now face a rate ceiling of 13%.
The lesson here is that, if the terms of the deal seem too good to be true, it probably is. Be careful with what your Florida home loan lender is telling you.
2. Know what it all means
Your credit report basically determines how loan-worthy you are. This report is based on your credit history, including how many credit cards you have, how well you make you payments, your debt load, your available credit and whether other lenders have inquired into your report.
Your credit score, meanwhile, is based on your credit report. Naturally, the higher the score, the better your credit rating is. And the better your credit rating, the more favorable loan rates you’ll get. Therefore, if you’re looking to buy a car or take out a mortgage, you’ll probably get a better interest rate if you have credit is above 620. Most credit scores range from 300-850.
3. Trouble Shoot
One out of four credit reports had errors serious enough to deny the consumer credit, according to a study by the US Public Interest Research Group. That’s why it’s so important monitor your credit report. Unfortunately, only 10% of Americans check their reports annually, says Steve Rhode of Myvesta.org.
Visit www.annualcreditreport.com or call or call 1-877-322-8228 to get more information. This way you’ll be able to identify mistakes or missing information, plus you’ll be able to catch any fraudulent activity. You will have to pay more to get your actual score.
4. Fix your credit
If you have discovered an error in your report, contact your credit bureau. When you receive your report, you should - by law - also receive a fact sheet detailing all your rights. Generally, negative information more than seven years old cannot be reported.
But if that debt is indeed yours, paying your bills on time is one of the most important steps you can take in cleaning up your credit, says Greg McBride of Bankrate.com. That alone counts for 35% of your score.
Make sure your debt load is not more than 50 percent of your available credit. Allen Fishbein of the Consumer Federation of America says that often people close down their credit cards to decrease the amount of credit they have. However, this lowers your credit limit, increasing your debt to credit limit ratio.
Also, do not transfer your debt onto that 0% introductory APR credit card. “That is a marketing tool,” says Rhode, “Not a personal finance tool.” If you don’t pay off your balance within the introductory period, your interest rate could zoom into the double digits.
5. Your lender doesn’t have your back
Two years ago, congress passed a law that said lenders must notify consumers when their credit scores have negative information that triggers a less favorable rate quote. Guess what? Affected consumers still haven’t gotten their letters.
The FTC has not even issued the date for when this policy will go into affect. The point is that you should be vigilant against negative marks on your credit report.
Take all of this into account as you weight your Florida home loan options. The more information you have available at your fingertips, the more prepared you’ll be for any obstacle in your way.
