What's a little risk between friends? A LOT!!!

Across the lending industry the new buzz of what's coming to some lenders and in existence at others is what's called 'risk based pricing'. What that means is that your interest rates and fees will be set by where you fall, based on your credit, your down payment and how you are documenting your income, into the matrices of the banks assessment of risk.

For example, for a borrower who wants to put 10% down on a $220,000, for a loan amount of $200,000, slightly below the national average, the difference rate or fees for a credit score of 620 vs. 680 could be 2 'points' (1 percent of the loan amount) or .5 in rate. So how does taht translate into real dollars and cents? It will cost the person with a 620 score $4,000 more up front or $23,675 over the life of the loan (assuming a difference from 6.25% at a 680 score vs. 6.75% at a 620 score on a 30 yer fixed rate). That's some serious money!!!!

Ok, so how do you make sure you get the best rates and fees? Two things are what matter, credit and down payment.

Get your credit right, don't exceed 33% of your credit card balances, pay your bills in a timely manner, avoid store credit cards and personal unsecured loans from finance companies.

If you are a First Time Home Buyer or have not owned a property in the past 3 years, take advantage of the state, county and local down payment assistance programs that are available at your disposal.

Buying a home is still the best long term investment you can make for yourself and your family. Take the proper steps to ensure you are putting yourself in position to secure your financial destiny now and in the days to come.