With so many mortgage lending companies out there, you might be wondering how to find one that has your best interests in mind. It can be more difficult when predatory lenders use deceptive tactics and tricks to trap people into less-than-ideal financial situations.
Look out for these five common signs and tactics predatory lenders use during the homebuying process.
1) Abnormally Inflated Interest Rates
Though not every home lender can issue low-interest rates, it doesn’t mean you should pay unfair rates. Predatory lenders tend to take advantage of those in less-than-ideal financial situations by charging higher than standard interest rates–sometimes in the triple digits–which it’s why it’s essential to read the agreement. *
In the meantime, keep searching for better terms, and take steps to improve your credit.
2) No Credit Check
While the idea of bypassing a credit check seems appealing, credible lenders will ask for information about your credit score, history, and any debt.
Predatory companies don’t ask for this information because they aren’t worried about you paying back the money–they’ll make money at your expense. Often, they’ll ask for a car title or home equity for collateral.
3) Loan Flips
Some homeowners refinance their homes to have the opportunity to get a better interest rate or lock their current one. However, when predatory lenders flip your loan, they’ll do so at an even higher rate.
To avoid this pitfall, dig into the terms and do the math to ensure you aren’t signing for something that will negatively affect your financial future.
4) A Rushed Contract
If a mortgage lender has your best interests in mind, they’ll take you through the terms and conditions so that both parties understand the legally binding contract. If they don’t allow you to ask questions and instead rush the process, they most likely have something to hide.
5) Blank Spaces
Blank spaces left in forms could be a way for predatory lenders to go back in and fill in new information. As a good rule-of-thumb, if you didn’t discuss it, don’t sign it. Even if you don’t think your lender left any blank spaces, obtaining a copy of the paperwork will cover you in the long run.
Your home is a big deal, so it’s essential to work with a trusted company that has your financial future and happiness as their top priorities. At USA Mortgage, we do everything we can to ensure your future is protected. If you’re ready to get started, connect with one of our USA mortgage lenders on our website.