Q: I'm really ticked off. I've been reading about mortgage rates below 5 percent, and figured I could get a great deal on a condo and move out of my apartment. I asked for 3 mortgage quotes, and none of them quoted the low rates they advertise. What happened?
A: There are several answers, but unless you have an excellent credit score of 740 or above, you will likely not qualify for the best available rates. Other factors affecting mortgage rates offered include employment history, income and assets, and the amount of your down payment. The less of a risk you represent to potential lenders, the lower your mortgage rate.
Q: My sister is something of a flake and is buying a house "she fell in love with" using an adjustable rate mortgage with a teaser rate of 3 percent or something. This sounds like bad news to me; With current mortgage rates so low, I told her to get a fixed rate mortgage. Any thoughts?
A: All you can offer is brotherly advice, but things may not be all that bad. If your sister is planning to move before the teaser rate expires, she could get a great deal. Before signing on the dotted line, however, she should verify that the loan carries no prepayment penalty. It's also a good idea to avoid negative amortization, deferred interest, and other features that can add to her mortgage balance rather than reducing it. For those not comfortable with crunching numbers and reading fine print, consulting a real estate attorney or financial advisor is a good idea.