We are in a tough market right now when it comes to real estate. There are many choices when it comes to houses and many choices for mortgages. It’s important to be diligent about protecting our homes and our credit rating. Peter G, Miller offers these tips in his book “The Common Sense Mortgage: How to Cut the Cost of Home Ownership by $50,000 or More” :
Types of mortgages you should avoid:
125 to 150 Percent Financing. If property values decline and you must sell, you’ll be in the red.
Balloon Loans. If you can’t make the balloon payment, can’t sell the home, aren’t eligible to refinance, or are otherwise unable to meet the balloon’s terms you’ll be in for a rude awakening from the American Dream. You could lose your home and your credit standing.
Land Contracts. You need a real estate attorney to understand its components.
Prepayment Penalty Mortgages. Amounting to as much as six months interest on the outstanding loan balance or 1.5 percent of the original loan balance, prepayment penalties can cut into the savings from a refinance.
- 40-year Mortgages. Longer terms, mean cheaper payments but total costs could amount to hundreds of thousands of dollars more over the life of the loan.
I am not a mortgage specialist but in this day of foreclosures and predatory lending I can offer this advice. Look into the reputability of any mortgage company or bank that you are even considering doing business with. Check out there reliability report with the Better Business Bureau. Ask friends or family for referrals to companies they’ve worked with in the past. Its a great time to be a buyer but beware, there are lenders out there that are not in looking out for your best interest. Its best to get pre-qualified before shopping for a home. This avoids a mad rush to get financed after you’ve already found “the perfect home”.