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Avoid Predatory Lenders When Refinancing
Author : Devora Witts
When refinancing your home mortgage because you cannot longer afford the monthly payments, you need to make sure to avoid predatory lenders that may offer lower monthly payments but at a very high cost. Though you may be tempted to accept a deal because of the low installments offered, you should analyze the whole deal thoroughly and choose a moderate repayment program that will not cost you so much on the long run.
It is a common practice among predatory mortgage lenders to deceive customers by offering low monthly payments and concealing additional costs, rates, and fees on the small print of the loan contract. You have got tools you can use to defend yourself from such practices but you need to know them beforehand.
The APR, A Comparison Tool
The APR or annual percentage rate is a wonderful tool when it comes to comparing loans and other financial products. It provides within a single figure a general idea of how costly a financial product can be. By comparing loans’ APRs you can quickly see which one is the most advantageous loan for you in terms of costs.
However, you need to understand that sometimes there are other variables that need to be taken into account too. For example you may obtain a low APR loan but this loan may come with a short repayment program which will imply high monthly payments that you might not be able to afford and thus, you will have to resort to other more expensive loans.
What Is Predatory Lending?
Predatory lending is in a legal sense the offering of certain secured loans such as home loans or car loans by lenders with the sole intention of seizing the property in order to sell it for a profit knowing that the borrower will not be able to afford the monthly payments on the loan. However, on a wider meaning, the term includes the practice of many lenders that convince borrowers to agree to unfair or abusive loan terms.
You need to be specially observant when it comes to mortgage lenders because the terms on the loans may push you towards default and on mortgage loans if you can not afford the monthly payments you may suffer repossession of the property. And though you can resort to refinancing, if you just did, it may be possible that you are no longer eligible for a loan in the eyes of most refinance mortgage lenders.
How Can You Prevent This?
In order to obtain financing and do not fall for these abusive practices, the best thing you can do is to search for different lenders and compare what all of them have to offer. Request free loan quotes from them making sure that your credit is not affected by excessive credit pulls. If possible contact the lenders informally prior to applying.
By comparing the interest rates, loan amounts, repayment programs, loan installments and other loan terms, you will be able to notice those lenders that are overcharging. Also, read the loan contract thoroughly looking for clauses that may endanger your property unnecessary. If you do not feel comfortable doing this on your own, do not be ashamed of contacting a professional advisor, he will guide you through the whole process.
Author's Resource Box
Devora Witts is a certified loan consultant with several years of experience in the credit area who instructs people regarding credit recovery and approval for personal loans, home loans, consolidation loans, car loans, student loans, unsecured loans and many other types of loans. If you want to understand Small Unsecured Loans and Unsecured Debt Consolidation Loans thoroughly you can visit her site http://www.badcreditloanservices.com. If the link doesnt work, just copy and paste www.badcreditloanservices.com in your browser’s address bar.
Article Source:
Articlebliss
Tags: home mortgage, monthly payments, avoid predatory lenders, lower monthly payments, moderate repayment program, predatory mortgage lenders, loans, lendres
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Submitted : 2009-02-10 Word Count : 626 Popularity: 74