Home Mortgage Tips: Five Signs That the Offer is Bad
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by: marciafreeman
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Do you need a home mortgage? How badly do you need a home mortgage? Some mortgage lenders hope youll need a mortgage very badly indeed, and when youre backed into a bad spot, theyre exactly the kind of mortgage lender you dont need. When you weigh which mortgage lender to pick, here are the top five danger signs of predatory lenders:
* Questionable marketing tactics. 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 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.
* 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. Predatory mortgages usually saddle borrowers with fees of 5% or more.
* Yield spread premiums. This is a well disguised piece of financial jargon for a kickback to the broker for convincing you to accept a much higher interest rate than you are entitled to. Legitimate home mortgages never have yield spread premiums. If you see one on a home mortgage you are offered, not only does it mean the mortgage is bad, it also means you could get a much better interest rate elsewhere.
* Prepayment penalties. 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 any of these signs apply to a mortgage you are offered, reject the offer and find another lender. 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 loan rates . Mortgage loan . Refinance mortgage . Refinance rates . Mortgage calculator .
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