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Most lenders value their customers and want to give them the best possible loan options. If you need to borrow money and your credit is good (or can be improved with extra effort) you will probably qualify for a loan with reasonable interest rates. Just make sure that the loan is only for the amount you actually need, is from a source you can trust, and has a monthly loan payment you can afford. This will generally ensure that you are not taken advantage of in the mortgage process. However, there are a few untrustworthy lenders out there (either big companies or local brokers) that direct borrowers away from loans with more affordable interest rates. Instead, they offer loans that carry very high interest rates, questionable fees, and unnecessary charges, such as prepaid single-premium credit life insurance. They advertise their products and services with phrases such as: “Need money? Bad credit? No credit? No problem!” followed by promises of easy money. Practices such as the ones referred to above are commonly known as predatory lending. Common targets of predatory lenders are low- and moderate-income persons, minorities, and the elderly. But anyone can be misled by a predatory lender. A loan from such a source could end up being a costly mistake. If you agree to such a loan and then fall behind in your payments, your credit can be ruined. You can also lose your cash savings, car, home furnishings, or even your home. If you fall victim to predatory lending practices, you may find it difficult or even impossible to repay the loan. If you fall behind in your payments, more charges may be added. Or the lender may suggest that you refinance the loan to lower your monthly payment. But the unpaid payments may be added to the new loan amount, costing you even more money over time. Then the loan becomes even more difficult to repay. If you can't make the payments, you could lose the items you purchased or used to secure the loan. There are ways to prevent being caught up in these kinds of practices. Here are some recommendations for you to consider when applying for a home mortgage.
• Watch out for any loan offer from a person who calls you on the telephone or comes to your door without an invitation. • Be wary of high-pressure sales pitches, such as claims that an offer is good only for a limited time. • If you're thinking about consolidating your debts into a home-equity loan, talk to a local nonprofit housing or consumer credit-counseling agency first. • Shop around for the best loan for your situation (good/bad credit, income, low down payment, etc). • Avoid loans that include extras you don't need, such as prepaid single premium credit life insurance. • Understand exactly how much the entire loan will cost, and make sure that the loan fees are reasonable. • Read every word in a loan document, and check everything for accuracy. If you have questions, ask the lender. Or, better yet, seek outside counsel. • Do not be pressured into signing for a loan you can't afford. In addition, you should never sign an agreement that you don't completely understand. • Fill in all blank spaces. If an answer is not required or would not be relevant, write “N/A” (Not Applicable) in the blank. |
