BEWARE OF BAD MORTGAGE LOANS
Unfortunately, while there are many excellent mortgage loans available today there are also some bad ones. If you are in the market for buying a house, then you want to do everything possible to secure a good loan. To help you avoid bad loans, ones that would end up costing you a lot of money, we have provided some helpful tips.
First, over the past several years, the real estate market has experienced a drastic reduction in interest rates, making real estate a great investment or home buying opportunity. However, when you begin to see one lender after another promising rock bottom interest rates and negligible fees that seem too good to be true, then you know the old say, “If it seems too good to be true, then it probably is not true.”
Some of the more common red flags associated with a bad mortgage loan include the following things happening with a lender:
Encourages you to falsify the loan application as a means of being approved
Urges you to borrow more money than you actually need
Urges you to take payment terms that are unrealistic for you
Fails to provide you with the required documentation
Shows up at the closing to finalize a different type of loan than discussed and agreed upon
Requests that you sign blank forms
Denies you copies of the documents that you signed
The above are just a few of the early warning signs associated with a bad loan. The problem is that once you start working with a lender doing unethical things, you are often too deep to get out. Therefore, the key is to know what is and is not acceptable ahead of time so if you do spot warning signs, you can pull back from the loan process.
Sadly, some lenders are simply out to rip homebuyers off. While this is not always the case, it does happen. You will even find lenders that have put buyers in loans with interest rates and fixed fees much higher than compared to the buyer’s credit risk profile. The result is the buyer is placed in a position of drowning after the closing. Sure, they can qualify but then as the monthly payments come do, the buyer finds they are in way over their head. When securing a home loan, work with a reputable lender and if you are uncomfortable with something said or done, find out why.