2) What type of interest rate? Different home loan terms make use of different rates. The two basic options are fixed-rate and variable-rate loans. A fixed-rate loan imposes permanent rates on your loan while variable-rate loans can change depending on the market index. Variable-rate loans involve more risk because you’ll never know when and how much the rates will increase.
3) How much is the APR? When comparing lenders, check out the home loan formula based on the annual percentage rate (APR). The APR includes not just the interest but other costs of your loan such as points, origination fee, insurance, etc.
4) How long is your loan term? A mortgage loan may be a 30-year fixed, 15-year fixed, and a combination of fixed and variable interest. The first part of your loan term may start with a fixed rate then change into a variable rate loan after a certain period. Ideally, long-term loans enable you more savings but a short-term loan can also be a practical choice if you don’t have plans of staying in your home for a long time.
5) How much loan can you afford? Calculate how much loan you can afford by considering your monthly income, your expenses, savings and your debts against your home loan.
6) How is your credit history? The status of your credit history affects the rates of your loan. The higher your credit score is, the more you can expect to get good loan rates.
7) How many points will you pay? A point is equivalent to 1% of your total loan’s value. These are tax deductible and some lenders will lower your loan rate depending on the number of points you pay.
8) What are sub-prime loans? These types of loans are especially designed for people with bad credit. Since they are considered as high-risk borrowers, lenders would impose higher rates on their loans. Still, it is possible to obtain the best sub-prime loan in the market if you do your research.
9) Is there a pre-payment penalty? Lenders usually charge a pre-payment penalty if you wish to make an advance payment on your loan. This is because the sooner you get off from your loan, the less interest you’ll pay, which means less profit for your lender. Don’t forget to inquire exactly how much is the pre-payment penalty before signing your loan.
10) What are the provisions of the loan? Will you be able to acquire easier repayment terms in cause of job loss or illness? Make sure that your lender has provisions for borrowers who are in financial trouble and who want to save their home.
About the Author
Liz Roberts is a loan consultant with
In some cases, the only way to straighten out the problem is through debt consolidation. Since the problem begins with missed or delayed credit card payments, consolidating credit cards and other types of debt could be the most effective solution. Through consolidation, an individual will only be paying a single interest rate instead of several interest rates from each of his creditors. By cutting back the amount of interest rate he pays, a consumer can save significantly on his debts. In addition, the debt consolidation company could give a lower rate of interest as this is what their service is about.
Another advantage of getting debt consolidation is that the borrower can obtain new repayment options. The credit consolidation company would make arrangements with the client’s creditors to come with a better payment term. The borrower can take advantage of the new payment terms so he can get off from his debts more easily.
Not An Easy Exit
What every borrower must know is that joining a debt consolidation program would not mean an easy exit from your debts. As the borrower, you are still responsible for the debts you owe and it would require determination and effort on your part in order to make the consolidation program work for you.
The first thing you need to do is to know exactly how much you owe from different creditors. Get a copy of your credit report to be sure that there are no incorrect charges in your account. You would need to do some of your own research in finding the right debt consolidation company to help you. Do not submit a lot of applications to different consolidation companies without doing research. Use the internet to find out about their rates and conditions. Call each company and make inquiries about their debt consolidation program. Remember to choose cautiously as you don’t want to get involved with a predatory consolidation company.
The Importance of Commitment
One important thing to remember is that once you’ve entered a debt consolidation program, you would have to be committed in making your monthly payments to your consolidation company. You can’t afford to delay or miss another payment because you’re already given a consolidated repayment term at a lower interest. Thus, do all you can to keep up with your debts.
It would mean not using your credit cards for new purchases for a while, cutting back on your expenses, getting a second job to be able to make payments. If you think that the problem is in your spending habits, then don’t hesitate to seek help from a reputable, trustworthy credit counseling service. Recognize the problem and be willing to make some changes before it’s too late.
Having a high credit score can significantly make a difference on how lenders approve your credit applications and how lenders give you their rates. What is the best way to improve your credit score? To better answer this question, we’ll be taking a look at how credit reports and scores are calculated.
Your credit score is totaled based on five major categories – your payment pattern, your payment history, your debts, the types of your credit, and new credits in your account. Now, let’s discuss each of these credit score categories.