In the current low mortgage rate regime, it is indeed very lucrative to opt for refinancing. With this you can actually replace your original mortgage loan with a new one with better terms. This helps you save money. There are many lenders who offer you refinancing opportunities – some of these lenders are predatory. While picking a refinance lender you have to be very careful so that you don’t get caught in the hands of a predatory lender. It is recommended that you should avoid those refinance lenders who follow the below mentioned practices.
1. Who promise to settle all your financial woes
Refinancing just offers you a new loan by replacing your original one. This way you may be offered a low interest rate. This in turn may lower down your monthly payment amount. This can really be a good financial tool and help you recover your financial situation. But, this can no way solve all your financial problems that you are facing. You should be very much skeptical about those companies which promise overall improvement of your financial situation. Before signing on any deal offered by any lender, you need to verify that company.
2. Who pressurize you to sign the deal
You may come across some lenders who pressurize you to sign on something. A true and genuine lender will never do that. A genuine lender will try to ensure that you understand all the terms and conditions attached with the deal, before getting you sign the deal. Even after signing, you have the chance to retreat, but you have to do that within next 3 days. It would be wise to keep all the copies with yourself also.
3. Who resort to false appraisal of the home
Inflated appraised value of a home can indeed be disastrous. Because of the falsely perceived high appraised value of the homes, you may be instigated to take out the amount of loans which you are not worth off. In fact borrowing more money which you are not actually worth of, had led to the serious financial crisis that the country had witnessed. Intentional appreciation of the appraised value of a home is a kind of fraud. You must be careful about these activities.
4. Who don’t provide the GFE document
Before making an offer to you, your lender is supposed to provide you the Good Faith Estimate (GFE) document. The GFE document provides you an approximate list of expenses that you will have to incur while taking out a loan. If the lender with whom you are working does not provide you the GFE document, then it would be wise not to work with that lender.
5. Who offers you money which you can’t afford
There may be some refinance lenders who force you to take out a loan amount which is more than the amount you can actually afford to repay. The higher loan amount may indeed be very tempting but the chances of losing your home are also higher in case you fail to repay the loan.