So many home-buying programs exist that the determined can almost always find a way to own a house — in all income brackets.

But that doesn’t mean the programs are all equally desirable, or as good, for the consumer.

When applying for a mortgage loan to buy a house, the old adage still applies: If it’s too good to be true, it probably is.

Generally speaking, a loan with the lowest interest rate and lowest closing cost is almost always the best deal. A customer should always be given a "good faith estimate" for the closing costs and interest rate, which should not increase substantially between the time it is given and the time a person closes on their home.

Many mortgage brokers will advise customers to shop around

"If (the mortgage broker) says you shouldn’t shop the deal, that is suspicious activity," said Texas Savings and Loan Department Commissioner Danny Payne. The department regulates the mortgage industry.

But for many people in the Rio Grande Valley, loans at the best interest rates are hard to secure without working at it.

Valley gets little credit

Many Valleyites have too much debt, or they paid for almost all their purchases with cash.

Both of these factors figure into a credit score, which is one of the most important determinants of the interest rate a person will be offered.

Unfortunately, mortgage bankers and brokers say that financial literacy — and credit scores — are very low in the Valley.

"My opinion is that credit scores to me seemed higher in San Antonio and in Austin than they did in the Valley," said Enrique Riddle, general sales manager for the San Antonio Retail Merchants Association, the marketing arm of Transunion, one of three credit bureaus in the United States.

Experts say that it is a fundamental misunderstanding of what credit is and how to use it wisely.

"People are fundamentally scared of having credit so they don’t use credit at all. It’s a problem that the people who have credit have bad credit, or they are people who don’t have credit at all," said Sandra Almanzan, director of the border region partnership office for Fannie Mae, one of the nation’s largest buyers of mortgages.

Most industry experts agree that more must be done to teach people about managing their debt.

Texas has one of the lowest average credit scores in the country, and many involved in the home-financing sector in the Valley say things here are even worse.

Valley residents don’t always know that paying a bill on time is just about as important as paying off the debt itself.

If a person loses a job or is having difficulty making payments, credit counselors urge their customers not to stop making monthly payments, but to try to make arrangements to pay off debt with the company owed.

Almanzan said unpaid medical bills significantly hurt people’s credit in the Valley, because even though the hospital may stop asking for the money, it usually is still reported against the customer.

One of the biggest border problems is family members or friends sharing one person’s credit line — a daughter buying a car in her name for her mother, or a girlfriend signing off on a boyfriend’s furniture.

"In other words you lend your credit to your mom to buy a house, and then when you go to buy a house it looks like you have three car payments and then you can’t get into a home," Almanzan said.

Many say it is a cultural thing. Recent immigrants from developing countries like Mexico distrust banking institutions, so they avoid opening savings and checking accounts. While many recent immigrants also avoid buying anything on credit, other first- and second-generation family members may end up in debt because they were not taught early about credit early.

Late payments past due for three months or more lower a credit score, which signals a credit risk to lenders. Ironically, if a person avoids owing money at all and always pays immediately for purchases with cash, that person wouldn’t have a credit score so a lender will not be able be able to track a pattern of payments. A person with no credit score is also considered a risky investment.

"It’s really back to that issue of financial literacy. Most people don’t understand how to manage credit, and if it’s managed properly it is going to work to your advantage," said Don Currie, who is in charge of the Community Development Corp. of Brownsville.

Have an interest in interest

Most mortgage loans are publicly traded. That means the market determines the interest rate. Rates change daily, weekly and even hourly.

People deemed the least risky often pay the lowest interest rates, and those considered more risky pay higher interest rates.

The difference can mean hundreds of dollars extra in monthly payments, and hundreds of thousands of extra dollars in interest after paying off the loan.

Low interest is also important because when less interest paid, more of the payment goes toward the principal, or the actual amount of money borrowed to buy the house. Paying off principal means a person starts to actually own a percentage of the value of the home, or has equity in the home.

And the equity is what builds real wealth for a family, because a person can borrow money against that. Or, when a person sells the home, it means the person gets to keep more of the sale value after the loan is repaid.

Unfortunately, getting the lowest interest rate isn’t as easy as simply asking for it.

Risky business

If a borrower misses three months of mortgage payments on his house, the lender can foreclose on the home, leaving the buyer property-less, without credit and often in debt.

This seems to be happening more and more often.

In 2003, 4,667 properties were in foreclosure in Hidalgo County, compared to 1,881 in 2000. Cameron County does not maintain similar data.

Many of the foreclosures are on property that was not financed through a traditional bank or a conventional loan, but on property bought through owner-financing where the owner of the property agrees to lend the buyer the money for the purchase. Usually that is done at a higher interest rate, which makes the payments harder to meet.

When persons lose their house, they also lose all the payments and fees that they made up to that point.

They also ruin their credit for years to come, making future purchases more expensive on everything from cars to furniture and, in some cases, insurance.

The rabbit vs. the hare

If a person has a low credit score, mortgage brokers often suggest waiting a few months and paying off some bills to improve credit.

"If they don’t qualify for a mortgage, we put them on the six- or 12-month plan," said Paul Schwab, president and chief executive of Valley Mortgage Co. Inc. "We don’t turn them down."

But there are some reasons to go with higher interest rates, called subprime rates.

For Mexican nationals buying property, subprime rates are often about the same interest rate as a conventional loan in Mexico. If they don’t have a credit history in the United States, it may be a good option.

And there are others who just aren’t going to change their lifestyle, said Mark Dizdar, owner of Casa Linda Homes, which self-finances the houses it builds.

Dizdar says he is helping a segment of the population buy a home. Otherwise that segment would have never stopped renting. Plus, if the buyer makes on-time payments for two years she can refinance the loan at a much lower interest rate.

"The choice is do I stay renting or do we buy this house now and improve our life now?" Dizdar said.

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