It's not uncommon in real estate to come across bad financial advice. However, on rare occasions that advise or counsel is so preposterous, it just begs to be addressed.
You see, financial specialists have the tendency to say, "shop for a rate". However, rate is only one factor to be considered when looking for a home loan, and it's not even the most important.
Bad advice is easy to give. As a matter of fact, any advice is easy to give. Recently a very popular MSNBC financial expert wrote an article, published in Yahoo's financial section, which implied if your FICO™score is lower than 600, you can expect to pay an extremely high rate of interest on your mortgage.
The reality is, if you have challenged credit, don't let any "professional advise giver" tell you, or imply, that you can expect to pay a 9% interest rate on your mortgage.
This is just nonsense!
Any "advise giver" that would state this either has no industry product knowledge or is inadequately prepared to address such an important financial issue without providing the reader full disclosure of the options, alternatives and corrective actions. Especially with so much money at stake for the borrower.
Last year Fannie Mae issued a statement, which said that 50% of higher interest rate home buyers could have qualified for a lower interest rate conventional loan product. (As published by www.mortgagemag.com.) How many homebuyers ended up with those much higher rates from bad advise?
With a little pre application work, you can in fact have a 500 to 600 FICO™score and get just as nice an interest rate as someone with a 680 to 750 FICO™score on a standard 30-year conventional fixed loan. How?
By using the FHA loan program. This program alone can save the credit challenged tens of thousands of dollars in the first two years of home ownership. Since the FHA program is credit driven and does not take into consideration credit scores, many prospective home buyers have more low rate alternatives than most doom and gloom "advice givers" imply.
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