Crucial things you need to know about low-interest home loans
Having a good credit score is extremely important for landing decent quotes for low-interest home loans. However, people with bad debt history might struggle while applying for home loans which offer the best interest rates. Individuals with bad credit scores are subjected to high-interest rates by lenders because the risk of investment seems enormous. And many scammers can take advantage of this vulnerability by promoting deceiving offers of easy home loans with low-interest rates. Read further to know how to choose the best home loans and evade the clutches of predatory lending
What are the warning signs of a home loan scam?
While you are shopping for various low-interest home loans, it is vital to exercise prudence. If it looks startlingly convenient, chances are there’s more to what’s been offered. Resorting to such iffy options for low-interest home loans can have grave and long-term consequences which can further damage your financial reputation. An excellent credit score or not, here are some warning signs of predatory lending that you shouldn’t overlook under any circumstance.
- Exaggerated claims – One of the most obvious signs of a personal loan scam is exaggerated claims such as low-interest home loans without any credit checks. Legitimate lenders will always run a soft and hard inquiry before financing borrowers. Furthermore, dubious lenders will be in an unusual rush to wrap up the paperwork.
- Upfront or hidden fees – At times, predatory lenders will ask for some kind of “upfront fees” along with your personal bank details. In some situations, fraudsters may demand hidden fees which are not mentioned in the advertisements or brochures they share. Lenders might cajole the clients into thinking that such fees are a legitimate part of the process, however, as a smart loan shopper you should always probe and refrain from falling prey to such tactics.
- No registration and physical address – If the lender fails to provide proper registration paperwork and a physical address for their office, then it a sign of them being a part of unlawful activities. All valid lenders, including the online ones, need to have a physical address and should be registered with the State Attorney General’s Office.
- Questionable communication – Cold calls or emails from unrequested sources containing bad grammar, misspellings, and use of informal format such as big and bold fonts are a sign of predatory lending. So never engage in any form of communication with such doubtful lenders.
Are there any government home loans with low-interest rates?
Yes, there are several government-sponsored programs for potential homebuyers. However, they may not necessarily offer low-interest home loans. Here are some options that you can explore.
- FHA (Federal Housing Administration) loans – Managed by the Department of Housing and Urban Development (HUD), FHA loans are available to all types of borrowers but they are popular among first-time home buyers. This program allows borrowers to qualify for a loan even with a down payment that is as low as 3.5% of the property’s value.
- VA loans – Similar to FHA, these loans come under the supervision of the Department of Veteran’s Affairs (VA). Like the name suggests, one has to be a military veteran to be eligible for this program. One of the most prominent benefits of the VA loan is that one doesn’t have to worry about down-payments or mortgage insurance.
- USDA loan – The US Department of Agriculture runs a loan program for families residing in rural areas. Moreover, it doesn’t require down payments and borrowers can also enjoy low-interest home loans.
Which are some of the best lenders for first-time homebuyers?
The lenders stated below are some of the top choices for first-time homebuyers.
- New American Funding
- Flagstar Bank
- Quicken Loans
- Carrington Mortgage Services
- Chase Bank
- Bank of America
- Navy Federal
Which are some popular online mortgage lenders?
The following are some trustworthy online mortgage lenders that can you can consider seeking assistance from.
- Rocket Mortgage by Quicken Loans
- Better Mortgage
- Guaranteed Rate