Now that we’ve gone through a rough economy that resulted in many people defaulting on home loans, or home equity loans, they didn’t understand, make sure to read the fine print on home loan offers today. You’ll see web advertisements and even local ads that tempt you with super low, fixed interest rates for a certain number of years. If not the fine print, then read between the lines. There’s a catch there, and you need to be aware of it before you jump in.
The word on the street is that banks are limiting home loan amounts to $200,000. After the banking crash, the organizations are being careful not to loan more than people can reasonably handle. That means the new home buyer may need a substantial down payment. Even with some safety measures in place, there are still some great deals out there that seem almost too good to be true. Don’t let the American short attention span wipe out your memories from last time. There is a catch in that 3.9 fixed percent interest rate.
Read these kinds of deals very closely. The first thing you will likely see is that the rate is set for a short number of years. It will be something like ten years. If you can pay your house off in ten years, than go for it! Realistically, you won’t do that, and the banks recognize this. That 3.99 is good for the first 10 years of the loan. After that, you’ll probably be at some amount above the prime rate. Do you think you can handle the increase in your house payment? If not. Pass on the loan. Ask for something with more long term security built in.
Good financial planning is the key to successful home ownership. Finding a loan you can live with is part of that plan. Also, try to find a loan officer that you feel you can trust. If the officer seems to be pushing a hard sell, excuse yourself and find someone else. This is your home. It’s OK to be picky.