Financing Information about Your Home & How some lenders prey on the uneducated borrower

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Let’s face it, loans can be confusing and stressful. Unless you have a finance degree or take the time to learn lender terminology, it can be overwhelming. Terms like Libor, 3/1 arm, 5/1 arm, variable rate, points, buy down or other terms make it difficult to know what’s what.

Because of this, some lenders and home builders take advantage of the uneducated. Recently there has been news about a well known billionaire who owns one of the largest home building and loan companies in the United States. In fact, his company also owns the dealership that sells the homes. There are many opinions about this structure. Some find it convenient because they are able to find a home, the builder and get the financing completed under the same umbrella.  Then there are those who feel structures like this do not always have their best interest at heart. Although convenient, many times they are not getting the best rates available.

To curb this practice, Congress passed the Dodd Frank law that is intended to protect consumers from predatory practices. Some of the unethical practices include:

Bait-and-Switch: This occurs when the lender promises one type of loan or rate. Then at the last minute the rate, term or type of loan will change. Often times, the interest rate won’t rise until several months or years after you start paying on the loan.

Balloon Payment Loans: Although your monthly payments are based on a 30 year loan, some of these loans are set up where you must refinance the loan within a few year’s. The problem with this type of loan is that you may owe the same amount that you initially borrowed, even though you may have been making payments for the past 2 – 5 years.  In some cases, you may not be able to refinance your loan because your home may have lost some of it’s value or you no longer qualify for a loan due to having less income or having more debt.

Junk Fee’s or Packing:  Watch for fee’s labeled under the following terms such as processing fee’s, review fee’s, Fed Ex fee’s, underwriting fee’s, document fee’s etc. Many of these fee’s are unnecessary and can be negotiated or removed from the loan.

Loan Flipping: Loan flipping is when the lender convinces you to take a high interest loan that can be closed immediately, then promises to refinance you within a few months at a lower rate. Usually when this is done, the lender or broker will charge you fee’s each time, thus lowering your equity in your property.

Equity Stripping: Equity stripping is when a person buy’s, refinances or gets a home equity line of credit (HELOC), borrows all they can against the property, then never making any payments and leaves the property to be foreclosed on.

Things that will help you get the best rates are the following:

  1. Having a Large Down Payment.
  2. Cash Reserves in the bank. 2 – 6 months. preferred
  3. Little Debt. Most lenders look at Debt-to-Income Ratio.
  4. Keeping your credit balance at 30% or less. This shows lenders you have credit discipline and don’t spend all you have available.

These secrets help streamline your loan and get you the best rates available.approvals.

One of the many reasons people invest in an manufactured home is that it allows affordable housing opportunity. There are very few markets where one can buy a new home for such a small investment.

DeTray’s prides itself on helping those in search of a quality home at an affordable price. The many years experience we have allows us to completely educate our clients and help them make their decision easier. The saying “knowledge is power” holds a lot of weight and we are confident that is what makes the difference between good and great.

We take a neutral position on what choices you should make. however, our goal is to help you find the perfect home and help you see the options that are available.

In short, we are here to help and only want what’s best for you.

 

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