Bad Home Mortgage Signs
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by: marciafreeman
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Are you in need of a home mortgage? How badly do you need a home mortgage? There is a class of mortgage lender that hopes you need a new mortgage very, very badly, and theyre exactly what you dont need when youre in a tight financial spot. Here are the top five signs to watch out for when youre considering mortgage lenders:
* Aggressive marketing. Borrowers seek out good home mortgage lenders; legitimate and reputable lenders do not need to hunt down borrowers. On the other hand, disreputable lenders are always on the prowl for new customers. Hard sell tactics, telemarketing, and junk mail campaigns are all advertising methods that predatory lenders use but legitimate lenders do not. Avoid any lender who uses these marketing tactics.
* High interest rates. Interest rates on bad mortgages are usually markedly higher than the market average. Some lenders target borrowers with poor credit ratings, since such borrowers have difficulty getting a home mortgage from a legitimate lender and are more likely to accept a high interest rate. Others simply hope the borrower will be too inexperienced to know the interest rate is too high. Predatory lenders often suggest dealing with the high interest rate by refinancing, or "flipping," the home mortgage frequently.
* Sky high fees. While legitimate mortgage fees may feel like they pack a punch, they amount to 1% or less of the total mortgage amount. Bad mortgages frequently come with fees of 5% or more.
* A kickbacks known as a yield spread premium. This official sounding piece of jargon is a euphemism for a kickback paid to the broker for finagling you into taking on a much higher interest rate than you would be qualified to get from a legitimate lender. A legitimate loan will never have a yield spread premium on any account. If you are offered a home mortgage with a yield spread premium, look elsewhere. Not only have you been offered a bad mortgage, but you have been told indirectly that you are qualified to get a much better interest rate.
* A penalty for prepayment. This is a charge for refinancing or paying off the mortgage early. While legitimate mortgages very rarely have a prepayment penalty with a short term tacked on, predatory lenders routinely discourage you from refinancing to a better lender with prepayment penalties for terms of three years or longer.
If you see any of these signs, back off and look elsewhere. No matter how badly you need a home mortgage, you dont need one as bad as the ones these lenders will sell you. Resourses Home mortgage . Home equity loans . Refinance rates .
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