It's Your Money: Mortgage loans

RALEIGH Mortgage rates are near record lows and that has triggered a flood of applications to refinance more expensive home loans. But some experts warn there are still problems to avoid.

"The safest type of loan product is a regular old fixed mortgage where you know what the interest rate will be over the next 30 years," said Al Ripley with the NC Justice Center.

Ripley has fought to adjust loans for home owners he says were often tricked into signing bad mortgages.

"We've had a lot of people who were promised a 30 year fixed mortgage at a certain rate, and when they got to the closing, it was not a 30 year fixed mortgage. It was an ARM loan," he said.

Mortgage companies are now advertising historically low interest rates, but Ripley says people need to focus on the annual percentage rate which also includes the cost of fees over the life of the loan.

"So you can compare the APR for one loan to another loan you might get and really determine which is going to be the least expensive loan for you to get," Ripley said.

The irony of the low rates is they often will not help those who need them most. People with those adjustable sub-prime mortgages would like to avoid exploding housing payments. But they still have credit scores which are still too low to qualify for a new loan.

These days, higher credit scores are needed to qualify. So it's best to know your credit score before anything else. And Ripley says pull the score yourself.

"You don't want each lender you go to to be pulling your credit score, because that over time will lower your credit score."

And most of all, Ripley says borrowers should not be confused on signing day.

"At closing, if anything changes and it's not what you were promised, you can just get up and walk away from the transaction," he said.

Because a home loan is the biggest investment most people make.

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