May 1st, 2011 | 
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Shopping for a mortgage loan is no different than shopping for any other product; the rule of “buyers beware” applies to mortgage loans just like it applies to purchasing televisions or automobiles. The majority of mortgage lenders operate honest businesses, and many genuinely care about helping people; however, there are dishonest mortgage lenders that try and take advantage of their borrowers. Here are tips to help you avoid these predatory mortgage lenders and find the best mortgage loan.
Predatory mortgage lenders practice a variety of unfair lending practices. These practices include charging excessive fees, structuring loan terms to promote foreclosure, and often provide poor customer service. An important part of taking out a mortgage is comparison shopping from a variety of lenders and brokers so you will know what fair interest rates, terms, lender fees, and closing costs are.
Everyone that takes out a mortgage has to pay lender fees and closing costs. Predatory lenders inflate their fees and closing costs, often disguising them in the fine print of your loan contract. This is especially true of some lenders that specialize in bad credit mortgage loans. If the charges a lender quotes you seem excessively high, ask for an explanation of those fees. If the lender is not forthcoming with an explanation or will not reduce the fees in line with other lenders, you should seek your mortgage loan somewhere else.
There is another way predatory mortgage lenders take advantage of borrowers; bad lenders structure their loan terms to make it difficult for homeowners to keep up with their payments. They do this by requiring large balloon payments, periodic refinancing, or purchasing additional insurance as a condition of qualifying for the loan. The lender does this hoping you will default on the mortgage and they can seize your home.
One trait nearly every predatory lender has in common is poor customer service. These lenders use pressure sales tactics, are unresponsive to your questions, and do not process your information in a timely manner. You can learn more about your mortgage options, including how to avoid bad lenders and common mistakes by registering for a free mortgage guidebook.
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