Loan Information Tips

Some Loan Information Tips

*) Pre-Approved Loan
When shopping for a pre-approved loan, make sure the lender gives your a quote on a fixed rate of interest and not a variable rate that floats up and down as interest rates change.

*) Auto
Forced Placed Insurance: If the lender discovers that you have no car insurance on your vehicle, they will take out a special policy to cover the vehicle loan they approved for you. This kind of insurance is very very expensive and it only covers the collateral. The lender will then add the premium costs of the new vehicle insurance policy to your loan, and you must pay it, so make sure you get your own vehicle insurance coverage you need.

*) Some Places to Shop For a Loan

A) Your local credit union
B) The internet
C) Banks
D) Mortgage brokers, they deal with mortage lenders to get you competitive loan rates

*) Auto
If you finance your vehicle with the car dealership, insert N/A (means not applicable, not applied) or put a cross through any blanks not applied to you. If information is inserted by someone else after you have signed the contract, you may still be bound to the terms of the contract. Never sign a blank document or a document containing blanks.

*) Home Equity
Truth in Lending Act
Anyone who wishes to borrow against their home equity, you have three days, it's a legal right, to walk away from that home equity loan if you change your mind for any reason within three days of its issue, according to the Truth in Lending Act. You must inform the lender of your wish to cancel the loan in writing and within three days of issue. The lender must then cancel its security interest in your home and return all fees to you, including any application and appraisal fees you paid to open the account.

*) A Bigger Loan?
If a lender says you qualify for a bigger loan than you thought, try to avoid the temptation and stay within the price range you planned on in the first place. The extra money you won't have to pay on the bigger loan payments can be used for other things you will need or for unexpected emergencies. Avoid buying more home, or car, or boat than you need and can comfortably afford. Borrow wisely.

*) Reverse Mortgage
In a regular mortgage, you make monthly payments to the lender. But in a reverse mortgage, you receive money from the lender and generally don't have to pay it back for as long as you live in your home. The loan must be repaid when the last surviving borrower dies, sells the home, or no longer lives in the home as a principal residence. Reverse mortgages can help homeowners who are house rich but cash poor stay in their homes and still meet their financial obligations. But, reverse mortgages can use up all or some of the equity in your home, leaving fewer assets for you and your heirs. More about Reverse Mortgage

*) Be Honest
Be honest about your intention to occupy the house you want to buy. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.

*) Prepayment Penalty
A lender will charge a fee to the borrower for paying off the entire loan or a large portion of the principal (generally an amount that exceeds 20% of the original principal balance) before the end of the term of the loan, and with the prepayment penalty mortgage (PPM), that specified period of time for the penalty in effect range is usually between 2 to 5 years from the start of the loan. Ask if the mortgage loan you are applying for is a Prepayment Penalty Mortgage (PPM). Always check with the lender if you can pay extra payments or pay the entire loan off early (if you choose) without a penalty. More about Prepayment Penalty

*) Read What You Sign
Don't sign anything you haven't read or don't understand. If you have to, take it home and read it throughly.

*) Don't Buy Under Stress
Research suggests senior citizens, people in crisis (coping with a death or debt), college students, small business owners, minorities, and immigrants are especially at risk of being victimized. Avoid making big ticket purchases during times of duress.

Federal Laws
Major laws that govern financial institutions and protect individuals in their financial dealings

Organizations

Fannie Mae
Freddie Mac
Ginnie Mae
Nellie Mae
Sallie Mae

Consumer Info

Credit Bureau
Credit Report
Directory of Federal Agencies
Federal Trade Commission (FTC)
Identity Theft
Predatory Lending
Repair Your Bad Credit
Truth in Lending Act
Borrowers Beware

Miscellaneous

Private Mortgage Insurance (PMI)
Prepayment Penalty

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