When you are in the market for a mortgage or a home equity loan you want to steer clear of predatory lenders. Predatory lenders take advantage of homeowners with excessive fees, penalties, and rates. Here is all you need to know to avoid bad lenders.
Pick an Honest Lender
Finding a reputable mortgage lender is more difficult than it sounds. Mortgage brokers and lenders often take advantage of homeowners with their commissions and fees. Brokers and lenders that aggressively promote their products should raise a warning flag.
High pressure sales tactics are a sure warning sign of predatory lending practices. You need to carefully examine all aspects of the loan offers you are considering and compare them to other lenders. Make sure lenders and brokers are licensed and check with your local Better Business Bureau to see if complaints have been filed.
Pay Attention to Detail
Read your loan contract carefully, paying close attention to the fine print. Abnormally high interest rates, fees, penalties, and balloon payments should be avoided. A balloon payment is a large sum due at a certain date that would require you to refinance the mortgage in order to satisfy the balloon payment. Requiring homeowners to refinance at regular intervals is a tactic predatory lenders use to charge unnecessary fees.
Shop Smart for Your Mortgage
Prepare a budget before you look for mortgage lenders; this will help you to know how much you can afford. Compare as many mortgage products as possible; however, do not let mortgage lenders access your credit while shopping. You will need to request no-obligation quotes from these lenders to prevent them from accessing your credit. Too many credit inquires in a short period of time will damage your credit score.
To learn more about avoiding predatory lenders and how to avoid paying too much for your mortgage, download a free mortgage guidebook.
To get your free mortgage guidebook visit RefiAdvisor.com using the link below.
Louie Latour is a mortgage professional and the owner of RefiAdvisor.com, a mortgage resource site offering a free gift for homeowners: "Mortgage Refinance: What You Need to Know." This guidebook helps homeowners avoid common mortgage mistakes and predatory lending practices.
Claim your gift today at: http://www.refiadvisor.com