Real Estate, Automobiles and Big Ticket Items New Trend Mortgage Loans
Online or on TV the current trend is to tout either "We Can Finance Anyone" or "Borrow $500,000 and Pay Just $750 a Month."
Keep in mind that many loan companies have given loans to everyday folks who were in trouble and desperate to raise cash to pay off many different types of debts or pay off credit cards only to keep using the cards and with out a clear budget plan find themselves back in credit card hell in under two years and end up losing their home to a high priced (loan percentage) when they could not handle both mortgages and new high interest credit card debt.
In the second case the "new" loan that only requires payment of the interest amount sounds like an attractive way to start out with a bigger and better home. Some real estate investors are also "seduced" by the interst only loans.
It allows the buyer (or investor) to get in cheap and carry the house or property for even less and hope that re-selling the property makes them money as the property appreciates. If the hosing market prices are raising fast this strategy may work. But hosing prices are cyclic and getting into the market at the wrong time using this loan type can end in a financial disastor.
No Down - Everyone Qualifies ...
Keep in mind "There Is NO Free Lunch" is a saying that holds several truths! Yes, several. While we are bringing out a famous old proverb there is one more proverb to consider, "If It Sounds Too Good To Be True, It Probably Is!"
When a company provides a service they must make a profit to stay in business and that profit must be high enough to fit in with the type of business. If it doesn't the investors will go somewhere else to make even more money. When it comes to loaning money the better the terms seem up front the more a borrower needs to watch his back or understand the fine print.
Yes, there are loans that do not require a down payment. They usually have a higher percentage rate for the loan amount. In general the lower a persons credit score the higher the percentage interest toward the loan amount. So while a person with a low credit score can qualify for a loan the more the lender wants in interest as insurance that he will make a profit during the payback period. The lender assumes that a percentage of the loans they make will go bad and end with a forclosure (or repossession) and the likely hood is higher as the credit score goes lower.
It must also be said that there are situations that put a person in a possision that no one will truly lend them money. The idea behind this web site is to give the surfer the tools to stay far away from that credit situation.
The Come On
Let's make this one short and sweet. On the phone, by mail or online (email) offers for very low interest mortgage loans keep coming and many times the with very misleading or downright lies as the subject line. Is there any good reason to expect any service or quality from a person or company that tries to start a business relationship with a lie? No amount of sugar coating can change the fact they they will use trickery to get you to open the offer. What would make you expect anything other than false information, lies, fraud and cheating from then on? Put the offers in the trash where they belong.
Be careful of offers that require a fee to find a special loan for any reason. They take the money up front and either disapear or simply ignore the promise to find a loan or your money back and point out a "weasel clause" in the fine print that because you omitted something or made a mistake in filling out the forms allows them to void the "refund" part of the agreement. In addition they may give false information about the state of the credit report that stops folks from looking into legitimate offers.
Planned not Panicked
Spending or borrowing should be planned and planned with a cushion. The cushion can be your savings or a solid plan B. The mostly likely reason for errors in borrowing occurs when the decision is done in "Panick" mode. People do not make good choices when under duress and the worst kind of duress can be financial panick.
Try to plan well with cushions in place to avoid being in a money situation that would cause borrowing in a panick mode.
