Can You Identify a Bad Home Mortgage?
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by: marciafreeman
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Are you in need of a home mortgage? How badly are you in need of 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. Predatory mortgages, on the other hand, are what one expert called "loans seeking consumers." Predatory lenders use hard sell tactics, junk mail campaigns, and telemarketing, and even more suspiciously, they market door to door. Avoid any lender who uses these marketing tactics.
* High interest rates. Predatory loans generally carry interest rates that are much higher than the market average. Some lenders convince borrowers to accept high interest rates by targeting borrowers with credit ratings poor enough that they are hard pressed to get a home mortgage from a legitimate lender. Other lenders prefer to target inexperienced borrowers who are unaware that they are paying too much for their mortgage. Predatory lenders often suggest dealing with the high interest rate by refinancing, or "flipping," the home mortgage frequently.
* Bloated fees. Legitimate mortgage fees might look staggering on paper, but they dont come to more than 1% of the amount of the mortgage. Bad mortgages frequently come with fees of 5% or more.
* Yield spread premiums. 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.
* Prepayment penalties. This is a fee you will pay if you want to pay off or refinance the loan early. Good mortgages rarely have any prepayment penalty, and when they do have a penalty, the term during which the penalty applies is short. However, bad mortgage lenders frequently dissuade you from refinancing with another lender by tacking on prepayment penalties that apply for three years or more after you sign for the mortgage.
If any of these signs apply to a mortgage you are offered, reject the offer and find another lender. No matter how desperate you are for a home mortgage, you dont need a mortgage as lousy as the one youve been offered.
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For more about refinance mortgage, visit refinance.2web9.com/?Refinancing-Mortgage-Loans-with-the-Current-Rates&blog=3767.
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