The current economic crunch is said to be the outcome of home loans gone bad. Because a significant number reneged on their payments, banks and companies lost money that could have rolled into capital and started a domino effect. It's amazing how the seemingly small enterprise of real estate has impacted the country - and the world. But it could have been prevented if prospective buyers knew what they were getting into. Consequently, it all boils down to the home loan rate.
Unfortunately, unscrupulous realtors sell homes to less than capable buyers. They make the payable amount seem small, hiding the compound interest of the home loan rate. Sometimes, the variables in the fees aren't even clear; you just get an awful shock when you receive the bills.
Don't be fooled! Here are the ABCs of home loan rate:
A - Appraisal. This is determining the worth of the property. Make sure this is done by a qualified assessor who can give you a proper estimate of the house. This prevents you from paying too much for the property as well.
B - Borrowing. Unless you're Bill Gates, you'd probably need to borrow money to purchase your dream home. But borrow wisely. Lending companies need not make a slave of you.
C - Credit score. This pertains to the interest rate lenders will levy on you. If you potentially pose more credit risk, they will most likely give a higher interest rate on what you'll borrow from them.
Only once you know the exact home loan rate you'll be assuming should you make a decision on whether to sign a contract with your realtor or not. After all, what you want is a shelter, not a bomb over your head.
Mel writes about
home loan rate,
fixed rate home loan and other finance topics.
