There are a number of mistakes homeowners make that can cost thousands of dollars, even result in losing your home. Here are some of the biggest mistakes you need to avoid when choosing a mortgage lender. The dream of homeownership can quickly become a nightmare if you borrow from a lender that intends to take advantage of you. These predatory mortgage lenders exist; if you are not careful what seems like a great mortgage deal could result in losing your home. Here are tips to help you avoid bad mortgage lenders. Avoid Loan Offers with Prepayment Penalties Good mortgage lenders rarely include prepayment penalties in their loan contracts. If you have poor credit you may have no alternative but to accept a prepayment penalty; however, reputable lenders charge reasonable fees and have short durations for this penalty. Bad lenders charge excessive fees and restrict their loan contracts with these penalties to prevent you from refinancing your mortgage. Never Agree to Arbitration If a mortgage lender tries to get you to sign a contract with an arbitration clause it is a sure sign the lender is trying to take advantage of you. Arbitration greatly limits your legal rights when there is a problem and could result in you losing your home. Another sign of a predatory mortgage lender is one that places homeowners with good credit in bad credit mortgages. These sub-prime mortgages charge higher interest rates and fees than traditional mortgages. If your credit is fine there is no reason for you to be placed with a sub-prime lender. To avoid being taken advantage of by a bad lender you need to do your homework and research mortgage lenders and their loan offers. To learn more about avoiding common homeowner mistakes, register for a free mortgage guidebook. |
