The Dangers Of Introductory Loan Rates

If you want to know how to separate the good offers from the bad, then here is some advice for you. Being cautious will help you to avoid being conned and ending up paying more than you should. Although there are many excellent loan rates and offers out there, it pays to be cautious about introductory loan offers.

If you are tempted by an offer of a loan that seems too good to be true, then it probably is.

Advance fees for a low rate

Once trick you should avoid is the companies who ask for an advance loan fee which will be returned to you after a period of time, and in exchange you will get a really low interest rate. These companies are usually bogus, and you will probably never hear from them again, having lost your advance fee and received no other funds. Always make sure the companies you apply for loans from are reputable companies with an excellent history.

Low rates but high fees

Although some low rates really are low, they come with other hidden charges and fees that will cost you large sums of money. You might have to pay large processing fees, or the fees for late payment and early repayment might be extremely high. Before taking advantage of the low loan rate, make sure that the other charges are not going to cost you huge amounts of money.

APR advertising not always true

Although you might see a great offer for a loan, the APR that they advertise might not be the one you can actually get. This APR is probably true, but is only given to people with perfect credit records over a certain period of time. In general, the APR you can get will be higher than this, meaning the loan will not be as great an offer as you think.

Pre-approval letters

Another danger when looking at introductory loan offers is pre-approval letters. Although less common than credit card letters, getting letters through the post guaranteeing a great loan are getting more common. All you have to do is fill in the form and you will have the loan. However, the lenders might employ the bait and switch technique. This means that the amount you are pre-approved to borrow at the great interest rate will be replaced with a lower amount at a much higher rate. You have already signed the agreement and might be stuck with the loan. Make sure that with any loan you apply for that you are really getting what you want.

Good offers are out there

However, as long as you shop around for a reputable loan deal and borrow only what you can afford, you will avoid the dangers of introductory loan offers. The only danger with this is that you will borrow more than you can really afford to repay, which will leave you in serious financial difficulty. Lenders are more eager to lend you money than ever, and are consistently reducing their interest rates in order to entice customers.

Despite the dangers, there are plenty of great offers available.

Is A Refinance Mortgage A Good Idea ?

And, when it comes time to refinance mortgage loans, the same also holds true. These loans are, for most people, the biggest debt they will ever be encumbered with and the process of getting a home borrowing is often one of the most stressful things people experience. Very few people are able to own a home without utilizing mortgage home loans.

Sometimes, the length of a home loan can be reduced or stretched out even longer depending on the needs of the homeowner and what they are trying to accomplish through their mortgage refinancing. Just about anyone who purchases a house is pretty much destined to labor under the weight of mortgage payments for at least 30 years, which is the life of the most common mortgage loans.

There are any number of reasons why people refinance mortgage loans. One very common reason is divorce. In many cases one person moves out and the other wants to remain in the home. When this happens it makes a lot of sense to get the mortgage refinanced if possible.

Refinancing a home loan in this situation will assure that the house is only in the name of the one staying in the house. It will also serve to pay off the previous mortgage so that the other person is no longer obligated under the terms of the old home financing arrangements. In many cases, the house refinancing is taken out for an additional 30 years to make the payments manageable for the newly single person.

One of the most popular reasons why people choose to refinance mortgage home loans is because there has been a drop in loan rates in the home financing market. Often a family can end up saving hundreds of dollars every month even if the interest rates have only dropped half a percentage point, depending on the size of the loan. This often makes it an easy financial decision to spend a few thousand dollars on loan fees in order to save that much each month.

Many times the home loan lenders offer special incentives to encourage people to refinance their mortgage by waiving the closing costs, appraisal fees and other costs associated with refinancing. In these cases, it is simply a matter of doing the paperwork and then enjoying the lower monthly payments.

People often take advantage of the combination of lower interest rates and no closing cost loans to refinance their mortgage for a shorter time period. Many times people who have 20 to 25 years left on their original mortgage can get a refinance loan with lower interest rates. They take a 15 year mortgage and end up paying about the same monthly payment. This way they can cut many years off the life of the mortgage and will be able to enjoy a house that is free and clear much sooner.

Another reason why people are motivated to refinance their mortgage is to pay off their other debts. They can accomplish this if they have gained a good amount of equity in their house. When doing their refinancing, they can borrow more than the balance of the original home financing.

When people use part of the proceeds from their refinance mortgage loan, this is often considered a debt consolidation loan and it is a smart way to manage debts and pay them off sooner.

Another benefit is that the interest on the refinanced mortgage is tax deductible whereas the consumer loan interest is not. Since the high interest consumer loans are being paid off with a lower interest, the payment will go down, or the borrower can pay the same amount they were accustomed to paying and just pay the debt off that much sooner.