Purpose of this home buying tip: To give you the information you need to protect yourself from unethical or "predatory" lenders during the home buying process.
What's a Predatory Lender?
Unethical lenders are commonly referred to as "predatory" lenders. It's a fitting description, because just like the lion preys upon the weakest of the herd, these lenders prey upon the most uniformed of home buyers.
Some predatory lenders lure you in with big promises, such as low rates, easy qualification and flexible terms. Others use the "only chance" ploy, trying to convince you that they are your only hope for a mortgage loan. By the time you realize what has happened, you've become a victim of loan fraud.
How Can I Protect Myself?
Common sense goes along way to protect you from predatory lenders. Trust your "gut" instincts during the home buying process. If something doesn't feel right, it's probably not.
Here are seven more ways to avoid predatory lenders:
1. Educate Yourself
Educate yourself before buying a home. Your education should include the types of mortgages, how the mortgage process works, what rights you have under the RESPA act and more. You can start your education by visiting HomeBuyingInstitute.com, the Internet's largest library of professional home buying advice.
2. Get Professional Help
Seek professional help from a real estate agent. Agent fees are nominal when compared to the price you'll pay for a new home. And the protection and advice they can offer are priceless.
3. Know Your Market
Start following real estate trends in your area. Get information about the prices of other homes nearby. Don't be tricked into paying too much.
4. Compare Lenders
Shop for a mortgage lender and compare their costs. By comparing several lenders, you'll be more likely to spot red flags, such as unusually low interests rates or other "to good to be true" promises.
5. Be Honest
Never let a mortgage lender persuade you to make false statements on your mortgage application. You are solely responsible for the information you put onto such documents.
6. Read the Fine Print
Take your time when reviewing mortgage documents. If somebody rushes you to sign something, tell them goodbye. Have your agent review the documents with you, or hire a real estate attorney if necessary. Never sign a document until you fully understand it.
7. Don't Sign Blank Areas
In your mortgage application, make sure there are no blank areas to be "filled in later." If there are blanks, mark them with "N/A" or cross them out.
Conclusion
Trust your instincts when buying a home, ask plenty of questions, and read all the fine print. If a deal sounds too good to be true, it probably is!
* Copyright 2006, Brandon Cornett. You may republish this article online provided you keep the byline, author's note, and active hyperlinks.
Learn more:
For more home buying tips, visit HomeBuyingInstitute.com -- the Internet's largest library of home buying articles and advice. Online at http://www.HomeBuyingInstitute.com
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