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Advice for First Time Home Buyers Seeking Loans
First time home buyers are faced with a lot of confusion when seeking loans. Their inexperience could lead to them taking several wrong decisions which could become disastrous in the long run. Thus it is necessary to be well-informed on how the home mortgage market operates before entering into it.
Things to consider at the onset are the interest rates. That must be one of the prime deciding factors of the person seeking a home mortgage loan for the first time. After all, it is the rate of interest that will decide the amount of payment to make every month for a long period of time. The homebuyer must take time out and compare the rates of interest of different lenders.
However a low rate of interest is not just the only thing to be considered. Every mortgage has several other fees to be paid, such as appraisal costs, application fees, lawyers fees, closing costs, etc. All these must be found out in advance so that they do not hit hard later.
One more thing to consider is how much mortgage can really be afforded. This would determine how much payment the homebuyer would be making per month. The payments should not go beyond the budget of the borrower. When all these decisions are made, only then should a meeting be scheduled with the lender. The lender would make a careful study of the borrowers credit history and then only decide how much mortgage they would give, and at what terms. This is where the borrower must decide whether the payments could be afforded or not.
Rents must not be taken as a parameter to decide how much loan payments can be afforded per month. Rents are for a short term, while mortgages tend to go on for as much as thirty years. Hence, the borrower must think on a broader perspective. Also, the person will have to pay taxes such as property taxes, which were not involved when living as a renter. Renters get several utilities for free, but the homebuyer would need to pay for them. Examples could be water, gas and electricity bills. With homes bought on mortgages, the resident would also need to conduct repairs and maintenance, which were not the responsibility while renting out a house.
An often neglected part of the mortgage is mortgage insurance. All lenders make it mandatory for borrowers to purchase mortgage insurance in case of any eventuality. If the mortgage is a high-ratio mortgage, then this amount could be very high.
So, the first time homebuyer should not just take the rent to compare with how much payments he/she could afford, but consider all other expenses as well. Only then would he/she not feel the pinch of the mortgage payments month after month.
The lender should also be sympathetic with first time homebuyers. You could find this out in the way they carry the preliminary discussions itself. If they are too highbrow to condescend to first-timers, then you are well off with another lender. Talk to them in detail about the packages they offer, and the features of the loan, so that there are no misunderstandings later. It is wisest to take copies of everything that is related to the loan.
Bad Credit Auto Loans
Bad credit auto loans are among one of the highest non-paid loans in America. With higher interest rates and lower approval numbers, bad credit auto loans are few and far between. Many companies offer bad credit auto loans, but whether or not you decide this is the best company for you is key.
Companies
One of the lowest interest rates available for bad credit auto loans is 21%. This is much higher than the average 10% that good credit consumers are offered. The reason behind the higher interest rate for those with bad credit, is the finance companies and banks feel that those with bad credit are a higher risk when it comes to paying back the loans. They make this decision by looking at your credit history and whether or not the history shows instances of overextending or overspending. Research companies prior to deciding on one, even if that one is highly recommended by family or friends. That company may have been ideal for their needs, but every credit report and consumer is different.
Look for companies that offer a fixed interest rate, and not a variable one. Variable interest rates mean that one month your payment may only be $400, but the following month if the interest rate is higher, your payment will be higher as well. Companies that offer early payoff restrictions should carefully be considered. Some will fine you with a penalty for early payoff, while others will forgive a portion of the loan after making a few years of on time payments. Companies that offer you the possibility of rechecking your credit history after a year and then lowering payments should also be considered, as your payments could become lower.
Interest Rates
Interest rates are a major part of bad credit auto loans. As of now, there are banks offering 4.9% APR or annual percentage rates for good credit. Bad credit auto loans are seen as high as 29% APR at this time, which means that even though you have bad credit, and it has been shown by your credit history that you have a hard time paying on time, you will pay more than those with good credit. To a consumer, it does not make sense to put more payments on those who cannot afford it, but to banks and financial institutions, bad credit consumers are a possible loss. With higher interest rates, the payment goes up and normally the time period of the loan goes up as well.
Budgeting
When looking for a bad credit auto loan, decide how much of a payment you can really afford. Not the high end and the low end, but what you can actually afford with all of your other bills. IF you budget yourself within $300 of your bills, then you can& 8217;t actually afford that $300 payment and would have to go lower. This will help you decide what company to go through as well. Some companies will only finance new cars, in which case a payment would be well outside of your means. Complete a budget of all your bills and decide what payment is comfortably able to fit into your expenses. This will help guide you to a company that offers the options you need.