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F E D E R A L D E P O S I T I N S U R A N C E C O R P O R A T I O N
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For Current Homeowners credit limit, usually at a variable interest For further information on the issues
rate. addressed here and other topics related
6. Keep an eye on the servicing of
your loan. The entity that collects your Also, some HELOCs have low to mortgages, search for previous
payments and performs other duties introductory interest rates that can reset articles by topic in FDIC Consumer
for your mortgage lender, perhaps at a higher rate. The federal banking News at www.fdic.gov/consumernews.
including responding to inquiries and agencies have issued guidance to Also visit www.mymoney.gov and
initiating foreclosure actions against financial institutions on the importance consumerfinance.gov/mortgage.
delinquent borrowers, is referred to of early notice to borrowers about If you think you need one-on-one
as the loan servicer. It may or may not impending rate resets and making help assistance from an independent, reliable
be the same company from which you available to those facing rate increases source on topics such as buying a home,
got your loan, and it may be replaced that could be difficult to pay. See the getting a loan or avoiding foreclosure,
by another servicer over the life of the Winter 2013-2014 edition of FDIC consider contacting a HUD-approved
loan, perhaps multiple times. By law, Consumer News (www.fdic.gov/ housing counseling agency (start at
you must receive advance notice when consumers/consumer/news/cnwin1314/ 1-800-569-4287 or www.hud.gov/
the servicing of your loan is transferred heloc.html) for more on HELOCs and offices/hsg/sfh/hcc/hcs.cfm) or an
to a different company. And under new rate resets. attorney. Q
rules, you cannot be charged a late fee if
an overdue payment to the new servicer
is received within 60 days after the
transfer of duties. Wheels and Deals:
“If your loan servicer changes, carefully Finding an Auto Loan
review your account to confirm that
your payments are being accurately
That’s Good to Go
credited,” suggested Senior Policy Buying a car can be exciting, but don’t
Analyst Glenn Gimble. “Also by law, lose sight of how you will pay for it.
prior to closing on your loan you must Here are our latest tips on financing a
receive a disclosure about how often the vehicle through an auto loan.
lender transfers servicing. The answer
Review your credit reports long
may influence your decision to accept
before you go to purchase a car.
a loan from this lender or to choose
Correcting inaccuracies, such as an
a different lender, maybe one that
erroneous history of late payments,
services its own loans.”
can help you get the best loan possible.
7. Research the potential risks and Fixing mistakes may also save you
benefits of home equity products. A money on car insurance.
loan secured by a homeowner’s “equity”
To request free copies of your credit
in a home can be an economical way to
reports, go to www.annualcreditreport. dealers may be less flexible on the price
borrow money because the interest rate
com or call 1-877-322-8228. This is the of the vehicle if they don’t expect to
is typically low and, for many people,
only authorized site to obtain your free make money on the financing.
the interest paid will be tax deductible.
credit reports.
Generally, the equity is the current Don’t hesitate to seek different
appraised value of a home minus what Consider getting pre-approved for financing offers. You may be surprised
is owed on the mortgage. “As home a loan from at least one financial by how comparison shopping for an
values rise in a number of areas, home institution before you go to the auto loan can save you money. While
equity products are again becoming dealership. A financial institution, submitting multiple loan applications
more popular, but it’s important to keep such as one where you already have an generally can slightly lower your
in mind that, just like with a mortgage, account, may offer you a better interest credit score, those for car loans made
your home is at risk of loss if you fail to rate than what you get offered through within a short period (such as 14 days,
pay the loan,” cautioned Gimble. the dealership. And, don’t share with according to some credit scoring
the dealer the interest rate you’ve been models) generally are grouped together
There are two basic types of home
offered in case you want to explore loan to minimize the effect.
equity products. One is a one-time loan
options at the showroom.
for a lump sum, typically with a fixed Compare loan offers based on the
monthly payment. The other is a home Consumer advocates also suggest that Annual Percentage Rate because the
equity line of credit (HELOC), which you not even tell the dealer whether APR includes certain fees as well as
allows homeowners to borrow money you’ve already been pre-approved for the interest rate. “The size of your
one or more times up to an approved a loan until after you’ve negotiated the monthly payment is important, but
purchase price. That’s because some
continued on the next page
FDIC Consumer News Winter 2015
3
B U YIN G AND BOR ROW ING T I PS