Were you a victim of predatory lending?
- You didn’t know which mortgage fees were negotiable – Or how the lender actually made money on you. Without this understanding, a smooth talking mortgage loan officer could have bilked you out of thousands of extra dollars . . . legally, in mere seconds, since you don’t actually write a check for these costs. Remember, the loan officer is different from your friendly bank teller. The bank teller is paid a salary to be courteous and helpful. The loan officer’s job is to make money and an get paid a commission.
- You trusted the first loan officer that you talk to. – You probably wouldn’t say yes if someone asked you to marry them on your first date. Why would you just say yes to a stranger about a commitment of the largest single investment you will ever make? In fact, it will probably last longer than most marriages!
- You agreed to an interest-only or “payment option” adjustable-rate loan primarily to qualify for a more expensive house than you could normally afford. – In the current market of negative appreciation and falling prices, such a loan could be leaving you with a mortgage balance that could be more than the value of your home. And if the payment adjusts from a below-market teaser rate, you may be paying hundreds or even thousands of dollars more per month or may even no longer be able to afford the mortgage. You may be looking at a foreclosure and the loss of your biggest investment.
- You thought the interest rate is always the main thing. Most so-called astute mortgage shoppers think they should call around to shop rates. And rate envy is common, especially among male borrowers. But what closing costs will you need to pay to get that fabulous advertised rate? Do comparison shopping not just on the interest rate but on all of the loan costs.
- You didn’t double checking the final fees listed on the closing docs to the good faith estimate. – It is real easy for a lender or broker to pack on fees because of the huge volume of documents you will need to sign at closing. A deceitful closing agent may also use various tactics to distract you from the inflated numbers so you don’t even notice.
- You didn’t know if your mortgage loan was written with a prepayment penalty – If you need to refinance tp afford the monthly payment you may not be able to afford the prepayment penalty which is normally at least six months of interest.
- You thought you have to own a home and renting is just throwing money away – The down payment of 3-20% of the cost of the home, the realtor fees of 6-7%, the mortgage broker fees of 6-7%, the closing costs, add it all up and you can be talking some real money. Owning a home isn’t for everyone and renting isn’t always a bad option.
- You didn’t know if you were paying a back end yield spread – This is a fee paid to the brokers and loan officers for upselling the interest rate to borrow money on your home loan.
- You paid for “mandatory” add-ons – mortgage life insurance, credit insurance or some other add-on is useful only to increase the amount of money the broker receives.
- You paid hundreds of dollars to have a company set up bi-weekly mortgage payment plan – You could have done this yourself. Just toss and extra $100 or so toward the principal every month and the results are the same