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Top Five Mortgage Scams for Sub Prime Borrowers
Author David Schneider | Dec 27,2007
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While most mortgage lenders are investors who want to see an honest return on their investments, others are unscrupulous. They might lie and attempt to hide things from you to get you to sign a mortgage loan that is not in your best interest. If you are a sub prime borrower, then you’re probably a better target than consumers who have good credit. Some sub prime borrowers tend to feel anxious when they are looking for a mortgage because they don’t think that they can qualify for one that has a low interest rate and good terms. Some lenders will use that to their advantage by pressuring you into taking a mortgage that you don’t want.
Top Five Mortgage Scams for Sub Prime Borrowers: Excessive Fees
One common scam that unscrupulous lenders often try on sub prime borrowers is hiding excessive fees in their contracts. The lender might talk to you about how you’ll be getting an interest rate that is well below what someone with your credit history deserves. The lender might focus on this interest rate (which often isn’t that low anyway), so that you won’t ask about other fees. Once you sign the contract, though, you might find that you’re paying excessive fees that you didn’t even know existed.
Top Five Mortgage Scams for Sub Prime Borrowers: Changing Terms at the Last Minute
Some lenders will also tell you about how your mortgage will have a low interest rate and great terms. They might give you specifics on these terms, but the reality is that they never plan to give this mortgage to a sub prime borrower. When it comes time to sign the mortgage, you might find that there is a completely different list of interest rates and terms that you never agreed to.
Top Five Mortgage Scams for Sub Prime Borrowers: Adjustable Interest Rates
A mortgage with adjustable interest can be perfect for some people. A lender can usually look at the credit history and income of most sub prime borrowers and tell if this type of mortgage is right for them. Unfortunately, the lender might try to sell you the mortgage even if he or she knows that you’ll never be able to make the payments. They might try to lure you in with an initial period that has a low introductory rate, but they know that the payments are going to be unaffordable after this low-interest period.
Top Five Mortgage Scams for Sub Prime Borrowers: Requiring you to Use Their Home Inspector
Having a good home inspector is one of the ways that mortgage borrowers can protect themselves from predatory lenders. When a lender insists that you use a certain inspector, and you agree, then you have lost a lot of power. This contractor might have instructions to inflate the home’s worth so that you will take out a bigger mortgage. That means higher payments for you and bigger profits for the lender.
Top Five Mortgage Scams for Sub Prime Borrowers: Pressuring you with High Pressure Sales Tactics
Most scammers know that if you leave their office, then you’ll some realize that the offer they have made you is terrible. In order to prevent this, they will use high-pressure sales tactics to get you to agree to terms as soon as possible. They might even get you to sign papers before you have gone through the whole mortgage borrowing process. Lenders are required by law to give you certain information about your mortgage. Regardless of what the lender says, you have three days after you have received this information to back out of the deal.
Some Lenders will try to scam sub prime borrowers because the borrowers think that they don’t have many options. Even if your credit isn’t so good, you still have options. There are honest lenders who would like to have you as a client. You just have to recognize the scams and move on to a lender that is respectful.
While most mortgage lenders are investors who want to see an honest return on their investments, others are unscrupulous. They might lie and attempt to hide things from you to get you to sign a mortgage loan that is not in your best interest. If you are a sub prime borrower, then you’re probably a better target than consumers who have good credit. Some sub prime borrowers tend to feel anxious when they are looking for a mortgage because they don’t think that they can qualify for one that has a low interest rate and good terms. Some lenders will use that to their advantage by pressuring you into taking a mortgage that you don’t want.
Top Five Mortgage Scams for Sub Prime Borrowers: Excessive Fees
One common scam that unscrupulous lenders often try on sub prime borrowers is hiding excessive fees in their contracts. The lender might talk to you about how you’ll be getting an interest rate that is well below what someone with your credit history deserves. The lender might focus on this interest rate (which often isn’t that low anyway), so that you won’t ask about other fees. Once you sign the contract, though, you might find that you’re paying excessive fees that you didn’t even know existed.
Top Five Mortgage Scams for Sub Prime Borrowers: Changing Terms at the Last Minute
Some lenders will also tell you about how your mortgage will have a low interest rate and great terms. They might give you specifics on these terms, but the reality is that they never plan to give this mortgage to a sub prime borrower. When it comes time to sign the mortgage, you might find that there is a completely different list of interest rates and terms that you never agreed to.
Top Five Mortgage Scams for Sub Prime Borrowers: Adjustable Interest Rates
A mortgage with adjustable interest can be perfect for some people. A lender can usually look at the credit history and income of most sub prime borrowers and tell if this type of mortgage is right for them. Unfortunately, the lender might try to sell you the mortgage even if he or she knows that you’ll never be able to make the payments. They might try to lure you in with an initial period that has a low introductory rate, but they know that the payments are going to be unaffordable after this low-interest period.
Top Five Mortgage Scams for Sub Prime Borrowers: Requiring you to Use Their Home Inspector
Having a good home inspector is one of the ways that mortgage borrowers can protect themselves from predatory lenders. When a lender insists that you use a certain inspector, and you agree, then you have lost a lot of power. This contractor might have instructions to inflate the home’s worth so that you will take out a bigger mortgage. That means higher payments for you and bigger profits for the lender.
Top Five Mortgage Scams for Sub Prime Borrowers: Pressuring you with High Pressure Sales Tactics
Most scammers know that if you leave their office, then you’ll some realize that the offer they have made you is terrible. In order to prevent this, they will use high-pressure sales tactics to get you to agree to terms as soon as possible. They might even get you to sign papers before you have gone through the whole mortgage borrowing process. Lenders are required by law to give you certain information about your mortgage. Regardless of what the lender says, you have three days after you have received this information to back out of the deal.
Some Lenders will try to scam sub prime borrowers because the borrowers think that they don’t have many options. Even if your credit isn’t so good, you still have options. There are honest lenders who would like to have you as a client. You just have to recognize the scams and move on to a lender that is respectful. |
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