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| Only deal with licensed mortgage lenders
and brokers or those operating under and subject to federal and
state regulations. To determine if your broker or lender
is licensed by the State of Ohio, contact the Division of
Financial Institutions at 614-728-8400 or www.com.state.oh.us/dfi. |
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| Read and get copies of everything you sign
in connection with your mortgage. |
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| Beware of "Bait & Switch"
tactics where the lender or broker makes an offer with one set
of terms and then pressures you to sign a loan with more
expensive rates and hidden costs. |
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| Make sure your monthly payments are
affordable, and that you are NOT comparing apples to oranges when
looking at the old vs. the new payment. Be sure that
if the escrow of taxes and insurance is part of your old
payment, it is included in your new payment when comparing price
savings. |
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| Make sure the rate and terms quoted by your
lender and/or broker are given to you in writing and do not
significantly vary from those presented at closing. |
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| Do NOT ship based solely on lower monthly payments. Payments may be lower if the loan has a balloon
payment or a variable rate. Unless you expect falling
mortgage rates, a higher income or better credit rating in the
future, these loans eventually cost you more. |
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| Do NOT sign blank forms. Forms should
be completely filled out with no blank boxes or spaces. |
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| Beware of door-to-door home improvement
offers where the contractor offers to find you the necessary
financing to make the improvements. |
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| Never falsely state or allow others to
falsely state your income. You won't have your dream home
very long if you can't afford to make the payments. |
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| Do not fall for scams from out-of-state
businesses claiming to arrange mortgage loans for an advance fee
or with the advance purchase of special loan insurance.
Sending them a money order to a post office box or mail drop
will likely be the last time you see your money. |
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| Remain current on your present mortgage
obligations until closing and disbursement of new loan
proceeds. If you are paying other debts off as part of the
loan, remain current on them as well. Falling behind on
your current debt while waiting to get your new loan will hurt
you in the long run. |
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| Borrow only what you need and can afford
to pay back. If you need $5,000 to pay for a home
improvement, there is usually little sense refinancing your
existing mortgage and paying $6,000 in closing fees to arrange
the loan. |
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| Understand that if you consolidate your
credit card debt and other consumer debt into your mortgage or
home equity line of credit to have one lower overall monthly
payment, nonpayment of the loan could cause you to lose your
home. Also, a monthly savings will disappear if you
accumulate credit card debt again. |
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| Know your credit rating and qualify for the
loan you deserve. There is no reason to pay high rates and
fees if you can qualify for better terms. |
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| If the deal seems to good to be true, it
probably is! |
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| What is Predatory
Lending? |
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Predatory lending occurs when a mortgage
loan with unwarranted high interest rates and fees is set up to
primarily benefit the lender or broker. The loan is not
made in the best interest of the borrower, often locks the
borrower into unfair loan terms and tends to cause severe
financial hardship or default.
To determine if a loan is predatory in nature, ask yourself
these questions:
Does your past credit history justify the high rates and fees
charged?
Is the loan being made on the basis of your ability to repay the
loan and not solely on the value of the property?
Have the loan's terms been fairly represented and explained to
you?
Does the type of loan and the loan services provided meet your
needs and interests?
If you answered "NO" to any of these questions,
there is a possibility the loan is predatory in nature.
For consumers to avoid falling prey to these abusive practices,
they must be smart and informed shoppers. |
