Is Your Subprime Mortgage Lender A Predatory Lender
Subprime lenders offer financing for people with low credit
scores who don't qualify for a conventional loan. Subprime
financing can be offered through traditional mortgage lenders
like banks, credit unions, or mortgage lenders. There are also
specialized lenders who only deal with subprime mortgages.
Predatory lenders charge high fees, write loans in vague terms,
and structure payments so they can foreclose on property.
Predatory lenders take advantage of people who do not know their
rights in the lending process.
Signs Of A Good Subprime Lender
Good subprime lenders only charge slightly higher rates than
conventional lenders. They will also fully disclose their rates
and terms so you can make an informed choice. Good lenders
follow all the same practices as a conventional lender -
charging reasonable fees, answering all your questions, and
making reasonable terms on prepayment.
Signs Of A Predatory Lender
Avoid lenders who charge high closing costs, excessive late
fees, or large prepayment penalties. Such lenders are more
interested in making large amounts of money than offering a
service. Also watch out for lenders who try to lend more than
your home's value, forged documents, or refuse to disclose rates
and terms.
Strategies To Find The Right Lender
Comparison shopping is the best way to find the right lender.
Not only will you find the lowest rates, but you can be
comfortable with your mortgage lender.
Make sure you look at all the closing costs associated with the
loan. Legitimate lenders charge a number of fees, including
origination, application, attorney, and other fees. Through
comparison shopping, you will quickly become familiar with them.
However, if you see a list of unfamiliar items, make sure the
lender isn't trying to take advantage of you. You should only
pay fees for actual services given.
Keep checking your paperwork, even after you close the loan. Be
on the look out for terms that weren't disclosed prior to
signing loan documents. According to federal law, you have three
days after the loan's closing to walk away. The lender may keep
part of your application fee, but you get the rest of your cash
back.