Home Mortgage Refinance Tips

When looking to refinance an Orlando Mortgage or a Daytona Beach Mortgage beware of unscrupulous lenders and loan officers. These people only care about their own pockets and there has been more fraud and predatory lending on Orlando Mortgages and Daytona beach Mortgages than in most of cities in Florida.

Ever heard the saying buyer beware? Well its true. I hope this article about Orlando Mortgages and Daytona beach Mortgages help you defend your self against the storm of unsavory brokers lenders and appraisers and realtors

Predatory lending is abusive and/or illegal lending practices by lenders, Mortgage brokers, home improvement contractors, realtors, or appraisers that take advantage of unsuspecting borrowers.

Predatory lenders offer unfair loans that exploit a borrower's lack of knowledge or they handle borrowers with deception, fraud, or high pressure sales approaches.

This article provides an overview of common predatory practices so that borrowers can be both aware and prepared to avoid them.

Potential Targets · Anyone can be a target, but the most commonly targeted groups are minorities, seniors, and single women. Borrowers who have or think they have poor credit or who live in a location without many lending options can be led to believe that they cannot get a better deal than what is offered by a predatory lender. People in need of cash and who have home equity are targeted for "cash out" home equity loans to pay for medical expenses, automobile payments or credit card debt.

PREDATORY LENDING IS…

• High-Risk Loans. Borrowers may be pressured to accept higher-risk terms such as adjustable rate Mortgages, interest only loans, balloon payments, prepayment penalties, mandatory arbitration, or credit insurance.

• Out-and-out Fraud and Abuse. Lenders may falsify appraisals, income verification, or fill in blanks with terms not agreed upon by the borrower when originating a loan.

• Excessive or "Packed" Fees. Lenders may overcharge borrowers or charge for services that were not provided. As a rule, fees should not exceed 7.99% of the loan amount (4% for FHA or VA loans). Fees can also be "packed," or rolled into, the loan without the borrower's knowledge. Packed fees increase the total loan amount and leave the borrower not only paying the fee but also interest on the fee.

• Bait and Switch. The terms that were agreed upon before the closing are not the terms recorded on the Mortgage. Borrowers are either pressured to sign the new deal at closing or may sign without double checking the paperwork.

• Debt Consolidation. When lenders pressure a refinance so that the homeowner can "cash out" the loan for medical, automobile, credit card, or unemployment expenses, it increases the debt burden. Typically, borrowers refinance their loans to reduce monthly payments, but it is not unusual for a debt consolidation refinance to increase monthly payments.

• Loan Flipping. Loans are refinanced repeatedly after only a short period of time, with each new refinance accruing fees and sometimes prepayment penalties. Refinances are often presented as special options that can relieve the borrower with a lower interest rate and payments, but in reality, it increases total debt because refinancing and origination fees are added to the loan.

• Home Improvement Scam. Unsolicited contractors who contact homeowners door-to-door, by mail or via telephone may offer unneeded or overpriced home repairs. The contractor often works with a lender to put together a predatory deal. Typically, the contractor requires an upfront payment for work and then fails to complete the repairs, leaving the borrower with a bad loan and a home remaining in need of repair.

Ways To Prevent Predatory Lending When Getting A Orlando Mortgage Or Daytona Mortgage

Know your credit. Request a copy of your credit report. Make sure the information is accurate. It only costs $10-$15 per report. Each agency has a 3-in-1 package that includes all three reports for between $30-$40. This is a small price to pay to be sure that your credit record is correct before submitting an application for a Mortgage loan.

Equifax - 1-800-685-1111
Experian - 1-888-397-3742
TransUnion - 1-800-916-8800

www.equifax.com
www.experian.com
www.transunion.com

Seek advice. Take a home ownership counseling course to learn more about credit, budgeting, and the Mortgage process. Another good way to learn about financing a home is to discuss the experience with family and friends who have already purchased a home.

Prepare a budget. Understand your income and expenses and only borrow within your means. Do not take out a loan for more money than you need. If you get behind on payments, you could lose your home and all of the equity earned. As a rule, your Mortgage payment should not exceed 30% of your gross income.

Walk away from high pressure or confusing sales tactics. If you are qualified for the loan now, you will still be qualified after you have time to review the documents and consult with an experienced Mortgage advisor.

Ask questions. Ask the lender to show you where the terms are located. Do not sign documents until your questions are answered to your satisfaction and you fully understand the terms of the loan.

Do not sign any documents with blanks or information that is different from what was originally negotiated. Cross out blanks and ask for explanations about terms that have been changed. If the explanations provided are confusing, incomplete, or not to your satisfaction, do not sign the document.

Understand all of the terms of the loan. It is not enough to know the monthly payment and interest rate. You should know the annual percentage rate (APR), total amount of the loan, fees, points, and term length. Also be sure to ask about credit insurance, balloon payments, mandatory arbitration clauses, and prepayment penalties.

Do not leave the closing until you are given copies of all of the documents that you signed

Predatory Lending Tactics:

You are told that "bad credit is no problem" Credit is always an issue. Good credit with high FICO scores means you will get favorable terms on your loan. Bad credit might prevent you from getting any loan. Lenders who specialize in making loans to buyers with bad credit are known as sub-prime lenders and do not offer attractive rates or hard equity lenders who give very high rates and hope you don't pay so they can foreclose on your home.

The lender encourages you to lie on your loan application and claims "it is done all the time"
Do not sign blank documents and do not make false statements on your loan application. It is against the law to defraud a lender.

You are pressured to accept a risky sounding loan you do not understand nor want
Most folks have some kind of idea how much they feel comfortable paying per month on a Mortgage. Do not agree to make higher payments than you can afford to pay.

The lender pretends to care about you but you have a funny feeling about the pretense
Listen to your intuition. It is asking you to pay attention to this nagging feeling that something is not right. Trust yourself.

You receive assurances that the loan being offered to you will solve all your financial troubles
Nothing will solve all your financial woes until you stop spending money. There is nothing magical about a Mortgage, and nobody is doing you any favors in this business.

Only one lender is offering you a loan and claims nobody else will lend to you
Talk to other lenders and describe the situation get a third party's advice at this point.

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