Posted on: 31st Jan, 2006 02:10 pm
Hi,
Can I get some advice on some of the scams that occur in the mortgage market so that I can prepare myself better before approaching any lender or broker.
Can I get some advice on some of the scams that occur in the mortgage market so that I can prepare myself better before approaching any lender or broker.
Hi,
This is a problem faced by many borrowers and many fall prey to the lenders/brokers without knowing that they are being cheated. Though all lenders or brokers are not frauds but there are a few who are engaged in these malpractices.
It's a good topic to discuss before you go for a shopping. There is always a chance of getting fooled by the lender as they know far better than the borrower. But it is better to have an idea on the ways so that you can protect yourself to a large extent.
Some lenders offer very low prices in the advertisements but in practice you won't get the rates offered. You should not fall in the trap and should judge the market before going to that lender. None can give you an abnormal low rate.
Some lenders intentionally hide some of the fees associated to attract and you will know the different fees gradually when it will be too late. To avoid this you must get written document of all the fees that requires to be paid.
You should look for the existing rates in the market at the time of closing as if there is a fall in the rates some lenders try to suppress it and continue with the rate at the time of application.
If you go for a no- cost loan, then check the APR which should be the same as the interest rate. If you find that the rate is much higher then there is a probability that substantial amount of fees has been added to it.
Try to read all the documents before you proceed further with the broker/lender and don't just believe in their words.
God bless you.
For MortgageFit,
Samantha
This is a problem faced by many borrowers and many fall prey to the lenders/brokers without knowing that they are being cheated. Though all lenders or brokers are not frauds but there are a few who are engaged in these malpractices.
It's a good topic to discuss before you go for a shopping. There is always a chance of getting fooled by the lender as they know far better than the borrower. But it is better to have an idea on the ways so that you can protect yourself to a large extent.
Some lenders offer very low prices in the advertisements but in practice you won't get the rates offered. You should not fall in the trap and should judge the market before going to that lender. None can give you an abnormal low rate.
Some lenders intentionally hide some of the fees associated to attract and you will know the different fees gradually when it will be too late. To avoid this you must get written document of all the fees that requires to be paid.
You should look for the existing rates in the market at the time of closing as if there is a fall in the rates some lenders try to suppress it and continue with the rate at the time of application.
If you go for a no- cost loan, then check the APR which should be the same as the interest rate. If you find that the rate is much higher then there is a probability that substantial amount of fees has been added to it.
Try to read all the documents before you proceed further with the broker/lender and don't just believe in their words.
God bless you.
For MortgageFit,
Samantha
Hi,
Another thing I feel should be mentioned in this regard. Mortgage elimination programs offered by different companies are on the rise. You should know that there is no short cut to pay off your debt.
These companies ultimately do nothing and walks away with a large amount of money from you.
Ken
Another thing I feel should be mentioned in this regard. Mortgage elimination programs offered by different companies are on the rise. You should know that there is no short cut to pay off your debt.
These companies ultimately do nothing and walks away with a large amount of money from you.
Ken
Hi All,
Thanks for the information given in response to my query. I shall try to take care of the points that has been mentioned here by you while getting a loan.
Thanks for the information given in response to my query. I shall try to take care of the points that has been mentioned here by you while getting a loan.
Just one quick comment your APR will always be higher than your rate it isn't possible to get the 2 to match up unless the lender/broker hikes the rate up so high that they are using the yield spread or release premium to pay your closing costs. 1 Day of interest will increase your APR and it won't match the note rate. The avg difference between the 2 is usually around .250% depending on title closing fee's interest accrual etc.
Hi,
Regarding APR I have talked on no-cost loans. If it a true no-cost loan, then no fees should be collected by the lender and he should pay all the settlement costs on the behalf of the borrower without increasing the loan amount.
God bless you.
For MortgageFit,
Samantha
Regarding APR I have talked on no-cost loans. If it a true no-cost loan, then no fees should be collected by the lender and he should pay all the settlement costs on the behalf of the borrower without increasing the loan amount.
God bless you.
For MortgageFit,
Samantha
We were approved for a fixed 30 YR mortgage w/100% financing and paying down the rate. Our scores are fair and the high side of poor (over 580). Right before closing we found out that when the lender sent the loan out for PMI the final payment increased over 800. We refused the loan and sent the broker back to the lender to rework the numbers. If they can't meet our needs what our our options? We have a lof of money tied up the home purchase?
try to see if you can come up with 2.25% as a down payment. FHA has a no score requirement but you cant have any credit lates in the last 12months.
PMI starts receiving hits at 619-600, 599-580, 579-etc
You're probably had a increased by triple.
Find out if your lender is FHA approved....and try to come up with the down payment.
30yr fixed Rate can be around 6.5%
PMI starts receiving hits at 619-600, 599-580, 579-etc
You're probably had a increased by triple.
Find out if your lender is FHA approved....and try to come up with the down payment.
30yr fixed Rate can be around 6.5%
One important thing to help prevent mortgage fraud. And this is the important misstep that keeps these trolls making money and closing loans. If you are promised something, and it changes at closing... DON'T CLOSE, DON'T SIGN ANYTHING. Too many people just take it because they are afraid if they don't sign they will lose their dream home. A house is just a house until you make it your home. Can you ever make something you got ripped off on your home? Stop looking at it like the end all of the american dream. I say it again, a house is just a house, there are millions of them.
So to recap... Don't sign unless you are getting at or close to your original promised offer. A guy I used to work with did this all the time. He would send very low or even blank good faith estimates. Then right before closing he would let the people know the real deal. Some would close and some wouldn't, but in the end he always came out on top, while screwing the client that he should have been helping.
Hope this helps
So to recap... Don't sign unless you are getting at or close to your original promised offer. A guy I used to work with did this all the time. He would send very low or even blank good faith estimates. Then right before closing he would let the people know the real deal. Some would close and some wouldn't, but in the end he always came out on top, while screwing the client that he should have been helping.
Hope this helps
Yes Eric, it hurts people a lot as they expect to get low rates and deals they can afford and finally when the time comes, they get to know that they'll have to pay more in closing costs or stick to a higher interest rate for years.
You are quite right. I find people often signing into anything without even knowing about what the are doing. Sometimes, it's their spouse or anyone known who asks them to do it and then they face the trouble. and at times, it's the people themselves who sign a deal without getting the right details - I feel people are still very emotional about having a home of their own, not bad but one has to be practical when it comes to investing money and building an asset.
Regards,
Jessica
You are quite right. I find people often signing into anything without even knowing about what the are doing. Sometimes, it's their spouse or anyone known who asks them to do it and then they face the trouble. and at times, it's the people themselves who sign a deal without getting the right details - I feel people are still very emotional about having a home of their own, not bad but one has to be practical when it comes to investing money and building an asset.
Regards,
Jessica
