What Are Some Traits of Predatory Mortgage Lenders?
Some traits of predatory mortgage lenders include the lender not disclosing the taxes and insurance amount, trying to rush borrowers into making a fast decision and offering adjustable-rate loans that increase but never decrease. Borrowers should obtain their credit score prior to beginning; having a credit score at hand can help borrowers know if a Point score is too high, notes the Center for Responsible Lending.
A reputable lender informs potential borrowers what the total monthly payment will be. Predatory mortgage lenders often do not tell people up front about insurance and property taxes to make the payments seem lower and entice borrowers into getting a loan. The borrower is responsible for all these costs, so ask before applying if the amount quoted includes these costs, explains the Center for Responsible Lending.
Predatory lenders advertise that bad credit is no problem as another tactic to get people to sign for expensive loans. They frequently try to rush buyers into making a decision, contacting them often and pressuring them that the "good terms" may not last for much longer. Steer clear of any lender that says credit scores don't matter or makes a borrower feel coerced.
Adjustable-rate loans should be able to go down as well as up in terms of the interest rate. Predatory lenders try to get borrowers to take loans that never have a decrease in the rate. Ask what the worst case scenario would be for the monthly payment before committing to any loan.