Tips to Detect a Dishonest Mortgage Broker
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Every industry has a few bad apples, and the mortgage broker industry is no exception. While the majority of investment professionals are honest, there are always those who will take advantage of someone if given the opportunity – especially when money is involved. This is why it is essential to know the most common signs of a scam and how to avoid getting pulled in.
They Only Work with Certain Groups of People
Redlining, which is when lenders would not make loans in specific communities due to the racial composition, is now present once again, but completely different from what it was before. Today, many predatory lenders seek out groups they can market excessive loans to. This reverse redlining is appealing because these groups of people are typically in need of money due to excessive debt, unemployment, medical issues, or other issues. The people targeted are typically not aware of the choices available, such as legitimate bad credit mortgages in Cambridge. Groups that are usually targeted include the elderly, minorities, immigrants and those who have a low credit score.
Charging Unnecessary Costs
Another scam to be aware of is lenders who are trying to pack in additional costs for nonexistent services and products. Lenders will especially add to the cost of manufactured homes by including overpriced appliances and fixtures. Even before a borrower makes their first payment, they will be underwater because the actual market value of their collateral is already less than the amount of the loan they received. This results in a second mortgage in Cambridge not even being possible down the road since you will not be able to acquire any equity in the existing mortgage.
Providing Misleading or No Information about the Mortgages
A predatory lender will often use a type of bait-and-switch tactic by offering a person a loan that seems great. When the actual loan is processed, none of what was originally discussed is included. There are some borrowers who have been told that the FHA (Federal Housing Authority) will insure against loan fraud and property defects, of which both are untrue.
Presentation of Blank Forms and Documents
Seeking a private home loan in Cambridge does not have to be a negative experience. The key is for borrowers to take some time to shop around and compare referrals, estimates, prices and houses. No type of reputable mortgage broker will request a borrower to sign blank loan documents of contracts. This is a sure fire sign of a dishonest individual since it provides the person with the ideal opportunity to fill in the terms they desire, rather than what was agreed on with the borrower.
There is no question that predatory lending is a huge issue today. Regardless of if you are seeking a first-time mortgage or second mortgages in Cambridge, the potential of getting scammed is real. Knowing the signs, listed here, is one of the best ways to prevent this.