Mortgage Loans - The Top Predatory Red Flags
Below is a MRR and PLR article in category Finance -> subcategory Wealth Building.
Mortgage Loans - Top Predatory Red Flags
Overview
The subprime mortgage market is rife with predatory practices that exploit vulnerable groups such as the elderly, individuals with poor credit, and those with limited English proficiency. These unethical lenders not only harm their victims but also tarnish the reputation of the entire industry, including ethical subprime lenders.
A troubling mix of lax oversight, a declining market, and eager investors creates an ideal setting for predatory lending. Here are some critical warning signs to watch out for.
Key Red Flags
1. Upfront Fees
Never pay money upfront. If a lender demands this, leave immediately. Understand the distinction between this and a legitimate application fee.2. Adjustable Rate Mortgages (ARMs)
Be cautious if an adjustable rate mortgage is the only option offered. It may not be in your best interest.3. Balloon Payments
Avoid balloon payments, which are particularly risky for subprime borrowers. These large, lump-sum payments at the end of a loan can be financially devastating.4. Excessive Loan Amounts
If a lender pushes you for a larger loan than necessary, consider it a red flag.5. High-Interest Rates
Shop around if you encounter interest rates more than 5% above the prime rate.6. Enticing Offers
Be wary of loans paired with offers like free vacations. Good loans shouldn’t require such incentives.7. Pressure Tactics
Avoid lenders who use pressure to make you sign quickly, falsify information, or complete blank documents. This is a major sign to seek another lender.8. Asset-Oriented Lenders
If a lender seems more interested in your property than your ability to repay, they might be planning for a foreclosure rather than providing genuine assistance.Conclusion
The subprime market is filled with lenders looking to exploit those in desperate situations. By recognizing these warning signs, you can better protect yourself from becoming a victim of predatory lending.
For further information on mortgages and home equity, please follow the links below.
Jack Krohn is a prominent freelance writer specializing in mortgages and home equity, with over 35 articles to his name. He is also recognized as the top author of home security articles in the country, according to Ezine Articles.
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