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Home Buying Tip - 7 Ways to Avoid Unethical Lenders

by Brandon Cornett

Purpose of this home buying tip: To give you the information you need to protect yourself from unethical or "predatory" lenders during the home buying process.

What's a Predatory Lender?
An unethical lender (also known as a "predatory" lender) preys upon uninformed home buyers.

Predatory lenders often make big promises — low rates, flexible terms, easy qualification, etc. Other predatory lenders use the "we're your only chance" tactic, trying to persuade you they're your only hope for obtaining a mortgage loan. By the time you realize what has happened, you've become a victim of loan fraud.

How Can I Protect Myself?
Good old-fashioned common sense will help protect you from predatory lenders. Trust your instincts during the home buying process. If something doesn't feel right to you, it probably isn't.

Seven ways to avoid predatory lenders:

1. Educate Yourself
It's important that you educate yourself before buying a home. Learn all you can about the types of mortgages, how the mortgage process works, what rights you have under the RESPA act and more. The good news is, you can find most of this information right here on HomeBuyingInstitute.com!

2. Get Professional Help
Seek professional help from a qualified real estate agent. An agent's fees are nominal when compared to the price of a home, but the protection and advice they can offer are priceless.

3. Know Your Market
Keep track of real estate trends in your area. Try to obtain information about the prices of other homes nearby. Don't be tricked into paying too much.

4. Compare Lenders
Shop for a mortgage lender like you would shop for a new car — by making comparisons. By comparing several lenders, you'll be more likely to spot red flags, such as unusually low interests rates or other "to good to be true" promises.

5. Be Honest
Don't ever let a mortgage lender persuade you to make false statements on a mortgage application. You are solely responsible for the information you include on such documents.

6. Read the Fine Print
Take your time when reviewing mortgage documents. If somebody tries to hurry you into signing something, walk away. Have your agent review the documents with you, or hire a real estate attorney if necessary. Don't sign a document until you understand it completely.

7. Don't Sign Blank Areas
In your mortgage application, make sure there are no blank areas to be "filled in later." If there are blanks, mark them with "N/A" or cross them out.

Conclusion
Trust your instincts when buying a home, ask plenty of questions, and read all the fine print. If a deal sounds too good to be true, it probably is!

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