Five Signs That You Should Turn Down a Home Mortgage Offer
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by: marciafreeman
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Are you in need of a home mortgage? How badly are you in need of a home mortgage? There is a class of mortgage lender that hopes you need a new mortgage very, very badly, and theyre exactly what you dont need when youre in a tight financial spot. Here are the top five signs to watch out for when youre considering mortgage lenders:
* Questionable marketing tactics. Borrowers seek out good home mortgage lenders; legitimate and reputable lenders do not need to hunt down borrowers. On the other hand, disreputable lenders are always on the prowl for new customers. Predatory lenders use hard sell tactics, junk mail campaigns, and telemarketing, and even more suspiciously, they market door to door. If a lender you are considering uses any of these tactics, cross them off your list.
* High interest rates. Interest rates on bad mortgages are usually markedly higher than the market average. Some lenders target borrowers with poor credit ratings, since such borrowers have difficulty getting a home mortgage from a legitimate lender and are more likely to accept a high interest rate. Other lenders prefer to target inexperienced borrowers who are unaware that they are paying too much for their mortgage. Bad lenders often tell borrowers to handle the high interest rate by frequent "flipping," or refinancing, of the home mortgage.
* Sky high fees. Legitimate mortgage fees might look staggering on paper, but they dont come to more than 1% of the amount of the mortgage. Bad mortgages frequently come with fees of 5% or more.
* Yield spread premiums. This is a well disguised piece of financial jargon for a kickback to the broker for convincing you to accept a much higher interest rate than you are entitled to. Legitimate home mortgages never have yield spread premiums. If you are offered a home mortgage with a yield spread premium, look elsewhere. Not only have you been offered a bad mortgage, but you have been told indirectly that you are qualified to get a much better interest rate.
* Prepayment penalties. This is a fee you will pay if you want to pay off or refinance the loan early. While legitimate mortgages very rarely have a prepayment penalty with a short term tacked on, predatory lenders routinely discourage you from refinancing to a better lender with prepayment penalties for terms of three years or longer.
If you see any of these signs, back off and look elsewhere. No matter how desperate you are for a home mortgage, you dont need a mortgage as lousy as the one youve been offered. Similar content Mortgage loans -- Refinance rates -- Mortgage refinancing -- Home equity loans --
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