NEWS RELEASE

Media Contact:
Renee Beauregard 303-400-3456
Whitney Cortner, 720-479-3311, email wcortner@colocu.com

AVOID A “HAUNTED HOUSE” MORTGAGE EXPERIENCE

By Renée Beauregard, Executive Director, Consumers United Association

You’re never too old to enjoy the festivities of Halloween, but if you are in the market for a new house or looking to refinance your existing mortgage, be aware of the “tricks and treats” that often hide like a ghost in the fine print to avoid a scary “haunted house” mortgage experience.

In today’s up and down marketplace, current homeowners and first time homebuyers are bombarded with special deals that spook them into acting quickly on refinancing, taking advantage of low interest rates or no money down for their dream home. Shady mortgage deals can almost seem like a Halloween haunted house experience, filled with tricks and cobwebs such as endless fees, vague qualifications, deadlines and other spine tingling surprises.  So, be aware of what you’re walking into before the door slams shut behind you and you’re locked into a mortgage you can’t handle.

The best defense against “ghoulish” mortgage deals is to educate yourself on that latest trends and find helpful resources to guide you through the maze of mirrors. Some informative Web sites that report on the mortgage industry include: www.reuters.com; www.businessweek.com; www.CNNMoney.com; www.Bankrate.com; www.marketwatch.com; www.mortgageloantips.com; and www.thetruthaboutmortage.com.  

Most vulnerable to mortgage trickery are first time homebuyers. Before working with a Realtor, first time homebuyers should start by ordering a free annual credit report from www.annualcreditreport.com. Once they have reviewed it, resolved any negative items listed, and determined their monthly debt to income ratio, they can work towards homeowner qualification and reaching the ideal credit score of 680 or better.   However, these individuals should be cautious of alluring “teaser” rates advertised. Despite typically paying less upfront, interest rates can rise and the increased payments may give first time homebuyers quite a shrill. First-time homebuyer programs can be a great resource for those who want to learn the process and pitfalls and to qualify for downpayment assistance, For more information about first-time homebuyers programs visit http://www.cuacolorado.org/homebuying.asp#prequalify

 “Haunted house” mortgage schemes can also confuse current homeowners. Juggling the question of whether to refinance from an Adjustable Rate Mortgage (ARM) to a Fixed Rate Mortgage (FRM) can be a tricky question and the wrong answer can reap costly mistakes depending on each financial situation.  Seasoned homeowners should also be aware of the pros and cons of bi-weekly verses bi-monthly mortgages tagged as a mortgage acceleration program, potentially saving money on less interest paid on a mortgage and decreasing the principle loan balance faster. Although, ARMs, FRMs, bi-weekly and bi-monthly mortgages have their strong points, beware of devilish tales that conveniently leave out the details of required terms, qualifications, interest rates, and related fees that can make all the difference in your decision making process.

Capturing the interest of homeowners age 62 or older who live in their principal residence (built after June 1976) with substantial equity available, Reverse Mortgages are becoming more common and potentially damaging if not clearly understood. This home loan is tax exempt and allows a homeowner to take cash out of their home on a monthly or lump sum basis using their existing equity, without assuming a monthly payment or having to sell their home.  Certainly this type of mortgage can be beneficial to seniors that need access to cash, but frightening little details can easily slip by without careful evaluation and impact their golden years.

So, as with any financial opportunity, educating yourself fully on what you’re considering is the key to making a sound decision. Dedicated to educating consumers on financial issues, Consumers United Association (CUA), a nonprofit consumer advocacy association that serves consumers in Colorado, aids consumers in the resolution of consumer problems and provides a united voice for consumers in the legislative arena. Membership to CUA is open to Colorado residents who are interested in financial education and advocacy and is only $5 annually and $25 for a lifetime. For more information visit: www.cuacolorado.org.