Refinance
Mortgage Tips
When looking
for 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.