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Consumer issues / Your credit

Resources for improving credit, avoiding predatory lenders, and ensuring that your home is healthy and safe from hazardous materials and environmental concerns.

Comparison shop

Contact several lenders, and be very careful about dealing with a lender who just appears at your door, calls you, or sends you mail. Ask friends and family for recommendations. Talk with banks, savings and loans, credit unions, and the qualified lenders listed on this website.

Comparing loan plans can help you make a better decision. Request a good faith estimate from each lender you are considering. Beware of loan terms and conditions that may mean higher costs for you. Get answers to these questions:

Interest Rate and Payments

  • What are the monthly payments? Ask yourself if you can afford them.
  • What is the annual percentage rate (APR) on the loan? The APR is the cost of credit, expressed as a yearly rate. You can use the APR to compare one loan with another.
  • Will the interest rate change during the life of the loan? If so, when, how often, and by how much?

Term of Loan

  • How many years will you have to repay the loan?
  • Is there a balloon payment–a large single payment at the end of the term after a series of low monthly payments? When the balloon payment is due, you must pay the entire amount.

Points and Fees

  • What will you have to pay in points and fees? One point equals 1 percent of the loan amount (1 point on a $10,000 loan is $100). Generally, the higher fees are more than 5 percent of the loan amount, ask why. Traditional financial institutions normally charge between 1 and 3 percent of the loan amount in points and fees.
  • How and how much will the lender or broker be paid? Lenders and brokers may charge points or fees that you must pay at closing that can add to the cost of your loan.
  • Never give a lender any money prior to closing except for the fee to cover the cost of appraisal and credit report.

Penalties

  • What is the penalty for late or missed payments?
  • What is the penalty if you pay off or refinance the loan early (that is, is there a prepayment penalty)?

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