Saturday, September 09, 2006

How to avoid dangerous morgage lenders

What are dangerous morgage practices?

There are a lot of good morgage lenders across the country, both banks and small lending budinesses. But, There are many dangerous lenders that will try to hurt you financially buy getting you a morgage for terms and conditions that are very high and that can ruin you financially. Here are some things to watch out for and avoid when choosing a morgage lender. Bad morgage lenders will try to do the following:

  1. Sell properties for much more than they are worth using false appraisals.

  2. Encourage morgage borrowers to lie about their income, expenses, or cash available for downpayments in order to get a loan.

  3. Knowingly lend more morgage money than a borrower can afford to repay.

  4. Charge high interest rates to borrowers based on their race or national origin and not on their credit history.

  5. Charge fees for unnecessary or nonexistent products and services.

  6. Pressure morgage borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties.

  7. Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems.

  8. "Strip" homeowners' equity from their homes by convincing them to morgage again and again when there is no benefit to the borrower.

  9. Use high pressure sales tactics to sell home improvements and then finance them at high interest rates.

Watch out for these warning signs!

  1. A lender or investor tells you that they are your only chance of getting a morgage or owning a home. You should be able to take your time to shop around and compare prices and houses.

  2. The house you are buying costs a lot more than other homes in the neighborhood, but isn't any bigger or better.

  3. You are asked to sign a sales contract or morgage documents that are blank or that contain information which is not true.

  4. You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud - it does not!!!!

  5. The cost or morgage terms at closing are not what you agreed to.

  6. You are told that getting a new morgage or second morgage can solve your credit or money problems.

  7. You are told that you can only get a good deal on a home improvement if you finance it with a particular lender.

Armed with this information I hope that these lists of bad morgage practices and ways to spot bad morgage lenders will help you out and save you a lot of pain and heartache

No comments: