Buying a home, or refinancing your existing mortgage, is one of the most important financial decisions you can make.  That’s because it involves what is, for most people, their most valuable asset: their home.

Unfortunately, there are many unscrupulous predatory lenders, appraisers, contractors, and mortgage brokers who are waiting to take advantage of unsuspecting, uninformed consumers.  Predatory lending practices can cost a victim a lot of money, and even cause them to lose their home.  Here are some of the illegal practices of predatory lenders:

Predatory Lending Warning Signs

• Lenders who use false appraisals to sell properties for much more than they are worth.
• Lenders who encourage borrowers to lie about their personal information (income, down payment amounts, etc.) in order to get a loan.
• Lenders who knowingly lend more than a borrower can afford to repay.
• Lenders who charge additional fees for non-existent or unnecessary items and services.
• Lenders who charge higher rates based on race or nationality.
• Lenders who push riskier loan products, such as balloon loans, and interest only loans.
• Lenders who urge homeowners to repeatedly refinance loans when there is no benefit to the borrowers to do so.
• Lenders who use high pressure tactics to sell home improvements to homeowners and then finance them at high interest rates.

Tips to Avoid Predatory Loans and Lenders

• Be wary of high-pressure sales tactics
• Don’t be rushed into a decision
• Always shop around for loans
• Don’t be afraid to ask questions
• Ask a trusted advisor to look over documents that you don’t understand or look confusing
• Consider the total cost of a loan over its lifetime and not just the “low monthly payment”
• Watch out for lenders who promise that you can always refinance later for a better rate
• Never trust a lender to fill in information later on a loan document

REMEMBER IF IT SOUNDS TOO GOOD TO BE TRUE...
IT PROBABLY IS!