Tips on how to Avoid Abusive Lending Practices
By Cynthia Barron
Deciding to purchase a home or refinancing your existing home is one of the most significant decisions you will ever make. While most mortgage industry professionals are honest and ethical, it is still important you become knowledgeable of the mortgage process.
• Shop around and compare. If you need to borrow money for a home purchase, refinance, home repairs, or bill consolidation, shop around to different licensed mortgage brokers. Compare interest rates, closing costs, and what your monthly payment will be before making a decision. You should be furnished with a Good Faith Estimate (GFE) of costs. Use the GFE from each broker to compare the loan terms and costs.
• Be cautious. Be wary of anyone who calls you on the phone, or comes to your door offering “bargain loans”. Beware of claims that the offer is only available for a short period of time. If the loan terms seem too good to be true, it is.
• Understand the terms of your loan. Some loans may sound attractive because the monthly payment is small. Make sure you know the dollar amount of each monthly payment and ask if the monthly payment and/or interest rate can change at anytime during the repayment process. Ask if your mortgage balance increased instead of decreasing after make your monthly payment.
• Don’t be afraid to ask questions. You have a legal right to know the total cost of the loan, the annual percentage rate (APR), the monthly payments, and how long you will make payments on the loan. If you are unsure of any terms of the loan, ask for an explanation. If you don’t receive a straight answer, go elsewhere for your financing needs.
• Read carefully before you sign. Don’t sign any document you haven’t read or be pressured into signing loan papers that you do not understand. If you need an explanation of any terms or conditions, talk to someone you trust.
• Borrow only the amount you need and can afford to repay. Just because you qualify for a certain amount of money doesn't mean you should borrow the maximum. Determine exactly how much money you need, monthly payments you can afford and borrow only that amount. If you are consolidating debt, make sure you will have enough money left after closing costs to payoff the bills.
Cindy Barron
Barron Lending
954-227-0025
www.Barronlending.com
Past President Palm Beaches Chapter of Florida Association of Mortgage Brokers
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