CRMA November 2012: How to Score A Low-Rate Mortgage; Car Dealer Tricks to Avoid

How to score a low-rate mortgage—even if you’re not a billionaire

Of course it’s easier to get a sweet deal on a mortgage if you’re a billionaire, but with some extra planning, paperwork and patience, average folks can also score a low-rate one. Although lending standards are still tight, the four horsemen to qualify for today’s best rates are documented income, a high credit score, a significant down payment and a low debt load. The full story is available at www.ConsumerReports.org. Here are some of the tips outlined in CRMA to clear hurdles between you and the lowest possible rate:

• If you’re self-employed, dig out your annual and quarterly estimated federal income tax returns from the past few years to prove your schedule C earnings.

• If your credit score is below 740, the score that most lenders give the best rates, comb through your credit reports from the three main reporting bureaus to root out errors that unfairly hurt your score.

• If you don’t have the 20 percent down payment, redouble your savings efforts, or if you have the option, sell less-liquid assets like a parcel of land, art, or collectibles, to build down-payment money.

How to avoid car dealer tricks

Some car dealers are up to their old tricks, judging by allegations made by state attorneys general and the Federal Trade Commission. Here are some of the complaints that CRMA had seen and tips on how to avoid getting scammed. The full story is available at www.ConsumerReports.org.

• Getting sold previously damaged vehicles even though they were advertised as “pristine” or in mint condition: First, ask the dealer for a car-history report from CarFax or AutoCheck and call to verify the report’s authenticity. Next, ask the dealer to see the title, and check it for words such as “branding,” “salvage,” “rebuilt,” “flood,” or “manufacturer buyback.”

• Excessive interest rates: Find the best rates you can get from banks, credit unions, or online lenders, and get pre-approved for a loan. Then you’ll have an idea if the dealer’s rate is competitive.

• Promises to pay off an old loan: Don’t leave it to the dealer to pay off the loan on your old car or trade-in. If you’re buying a used car, verify that the dealer has the title document and lien release form, if applicable.

Consumer Reports Money Adviser is a monthly, subscription-only newsletter that answers tough money questions and provides expert financial advice. Its proven information and successful strategies can make any financial decision an easy one. Each month, CRMA provides feature articles and helpful investment, savings, and spending advice that will help prepare consumers for anything life may bring them. For more information visit: www.ConsumerReports.org.

Consumer Reports is the world’s largest independent product-testing organization. Using its more than 50 labs, auto test center, and survey research center, the nonprofit rates thousands of products and services annually. Founded in 1936, Consumer Reports has over 8 million subscribers to its magazine, website and other publications. Its advocacy division, Consumers Union, works for health reform, food and product safety, financial reform, and other consumer issues in Washington, D.C., the states, and in the marketplace.