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Avoid Predatory Mortgage Lenders

Tips To Prevent You from Becoming A Victim to Predatory Mortgage Lenders:

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.