When Faster is better

If you've just seen your dream house, and three other couples are also trying to buy it, you may want to get fastest possible mortgage. But don't rush! You can make a bid for house even if all you have is down payment, for then you have generally 60 to 90 days before closing date in which to come up with rest. (If you can't get a mortgage anywhere, you still get your down payment back, so you have nothing to lose!)

Most people get their mortgages from banks, which we'll tell you about too, but don't overlook another, faster possibility-the real estate broker himself! Brokers often have friendly bankers or other mortgage lenders lined up just waiting for them to find buyers of properties brokers are selling. It's easier for a broker to close a sale if he can help you, potential borrower, get mortgage you need. So he'll help you.

Aside from broker-arranged mortgages, "conventional" mortgages, (i.e., not backed by Government: are usually fastest kind to get. These are available from both commercial and savings banks and from savings and loan associations. Try savings and loan associations first-savings institutions usually require lower down payments than commercial banks, for example, 20% down at an S&L, compared with 25%-40% down at a commercial bank. The rule of thumb for amount of money that banks will lend toward a mortgage is usually capital amount that would result in monthly payments which will not exceed about 25-30% of your before-tax income. If you're trying to buy a house that's too expensive for you, bank will know that, by using their rule of thumb for what they will think you can afford: one month's housing costs (principal, interest, real estate taxes, and insurance) should not be more than one week's salary (after you deduct any other debt payments from your weekly salary figure). Know what figures look like before you walk in asking for a mortgage-if you look like you know what you're doing, bankers will be much more cooperative, and maybe stretch their requirements, especially if they know you as a person who has been a responsible borrower of theirs before!

Further "points" about mortgages

Sellers sometimes help out potential housebuyers, even when mortgage is financed by a bank. This can occur in two ways, first, if mortgage lender (bank, S&L, other) adds "points" to cost of mortgage. Technically, these points are percentage points that lender charges seller, to make interest rate higher. (Most States have usury laws, which make it illegal for mortgage and other interest rates to go above a certain level, like 81/2%. If interest rates in unregulated areas are higher, bank is going to get that higher rate one way or another!). So lender deducts, for example, five points or five percent from amount he is really willing to lend to borrower. Either seller has to take a lower price for his property than he expected, or buyer has to pay 5% more than he expected. Depending on how anxious seller is to sell, and how many buyers there are for his property, he may take lower price (pay points himself) or split cost with person who wants to buy his house, or else insist that buyer pay points all by himself.

In numbers, points work like this: 5 points charged on a $20,000 mortgage means that lender is not really going to lend $20,000, but only 95% or $19,000. Since seller wants $20,000 (in addition to down payment) as his price, buyer must pay extra $1,000, which is about same as adding an extra 1/2% to rate of interest he is paying.

More help from seller!

Sometimes sellers are anxious to sell their houses, but find it difficult to do so-either banks aren't making many mortgages at that time, or seller's price is too high, or neighborhood is "transitional" and potential buyers are reluctant to invest. So seller may offer a mortgage of his own to a buyer! This can be either a first or a second mortgage, (the second is in addition to and subordinate to first that you got from bank) especially if bank won't lend you what you need. If your dream house costs $40,000, with a $10,000 down payment, but bank will only lend you $20,000 to put with your ready $5,000 cash, don't despair. The seller might be willing to give you a so-called "Purchase Money" mortgage (money with which to purchase his house) for missing $15,000, to be paid back to him over next ten years in monthly installments. (Sellers sometimes like to do this as a way of getting an annuity, or annual income, for themselves or to reduce taxes they would have to pay if they received all cash in one year.) Real estate brokers won't always tell you about this angle, so you may have to do footwork yourself, following up ads that list owner or principal, not broker. But it could pay off!

-publish a list of consumers who refuse to pay their debts (except to a credit bureau);

-use obscene or profane language;

-repeatedly use telephone to annoy someone;

-telephone people without identifying themselves;

-advertise your debt.

False statements. Debt collectors may not use any false statements when collecting a debt. For example, debt collectors may not:

-falsely imply that they are attorneys or government representatives;

-falsely imply that you have committed a crime;

-falsely represent that they operate or work for a credit bureau;

-misrepresent amount of your debt;

-misrepresent involvement of an attorney in collecting a debt;

-indicate that papers being sent to you are legal forms when they are not;

-indicate that papers being sent to you are not legal forms when they are.

Debt collectors also may not state that:

-you will be arrested if you do not pay your debt;

-they will seize, garnish, attach, or sell your property or wages, unless collection agency or creditor intends to do so, and it is legal to do so;

-actions, such as a lawsuit, will be taken against you, which legally may not be taken, or which they do not intend to take.

Debt collectors may not:

-give false credit information about you to anyone;

-send you anything that looks like an official document from a court or government agency when it is not;

-use a false name.

Unfair practices. Debt collectors may not engage in unfair practices in attempting to collect a debt. For example, collectors may not:

-collect any amount greater than your debt, unless allowed by law;

-deposit a post-dated check prematurely;

-make you accept collect calls or pay for telegrams;

-take or threaten to take your property unless this can be done legally;

-contact you by postcard.

What control do you have over payment of debts?

If you owe more than one debt, any payment you make must be applied to debt you indicate. A debt collector may not apply a payment to any debt you believe you do not owe.

What can you do if you believe a debt collector violated law?

You have right to sue a collector in a state or federal court within one year from date you believe law was violated. If you win, you may recover money for damages you suffered. Court costs and attorney's fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of collector's net worth, whichever is less.

Where can you report a debt collector for an alleged violation of law?

Report any problems you have with a debt collector to your state Attorney General's office and Federal Trade Commission. Many states also have their own debt collection laws and your Attorney General's office can help you determine your rights.

If you have questions about Fair Debt Collection Practices Act, or your rights under Act, write: Correspondence Branch, Federal Trade Commission, Washington, D.C. 20580. Although FTC generally cannot intervene in individual disputes, information you provide may indicate a pattern of possible law violations requiring action by Commission.