Avoid Predatory Mortgage
Tips To Prevent You from Becoming A Victim to Predatory Mortgage
All you want to do is to make a better life for you and your family. And with the way the economy is acting
lately, things may have begun to get a little tough for you financially. It is perhaps for this reason that you
have decided to look into some refinancing options, or even for a mortgage you will need to purchase a home.
However, because not everyone in the world is made up of true, honest character, it is important for you to know
how to avoid predatory mortgage lenders.
What is a predatory lender?
When it comes down to it, any mortgage lender that tries to take advantage of a homeowner such as yourself can
rightly be considered a predatory mortgage lender. The way that they essentially "prey" on an individual is by
placing unnecessarily high fees on their services, or by pressuring the homeowner into making extra purchases or
investments in products or services that really will not be beneficial to them and their situation. In order to
avoid predatory mortgage lenders, you need to be aware that they exist.
What are the signs of a predatory lender?
One of the first red flags to look for are things like excessive mortgage origination fees and points. This
however, will require that you know enough about these fees on a general scale that you will be able to recognize
when one is excessively high, or unusually low. No one is going to tell you that their origination fees are much
higher than the ones offered at the loan institution down the road. That is something you need to educate yourself
on, as to avoid any pitfalls. Sometimes these mortgage lenders will try to distract you by emphasizing the fact
that you will not have to pay closing costs. However, what usually happens is that the interest rate will be marked
up, or added fees placed on the loan principle.
Other red flags to look for:
Sometimes, predatory mortgage lenders will penalize you with excessively high prepayment penalties. the fact is
that most mortgages today do not require the homeowner to pay any type of prepayment penalties. There are some bad
credit mortgage lenders who do add these penalties to the contracts of their clients, which generates a significant
amount of money for the lender over a period of time.
Be careful and smart as you go out into the world of mortgages. Be aware of what is good and what might seem a
little fishy. Do your best to avoid predatory mortgage lenders. You will be glad you did in the long run.