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Many homebuyers don't understand the difference between mortgage brokers and mortgage bankers. It's not hard to see why since they both sell loans |
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A sub-prime mortgage lender works with people who cannot qualify for standard mortgages. Poor credit scores and bankruptcies are what keep most people from qualifying.
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Typically, what happens when you go through a mortgage broker is that the broker gets a rate quote from a lender, and then marks up the rate. For example, a lender may quote a 7% loan with 2 points, but the broker gives you a quote of 7% with 3 points. That 1-point difference is paid to the broker |
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Ask your real estate agent, too. Most agents have brokers and lenders with whom they work. Keep in mind, though, that many agents have their own agendas. They want your loan to close quickly, and may refer you to lenders simply because they work fast. It doesn't mean they won't be ethical, but it's a good idea to keep that potential conflict of interest in mind and watch out for your own interests.
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One of the biggest issues facing first time home buyers today is finding an ethical lender. With the current instability of the lending market, many people may find it very difficult to get approved through conventional means. They are faced with going to mortgage brokers, who work to attract clients, gather required information, and present this information to mortgage lenders. Today's market is ripe for unethical lenders to crop up. The focus of this article will be to help home buyers spot an unethical lender.
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With the complexity of the mortgage process and the large fees at stake, some loan providers seek to profit at your expense. To make sure you are being treated ethically, you should:
Watch out for specific unethical practices
Use our Borrower's Bill of Rights to ask direct questions
Benchmark rates and fees using this site
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As foreclosures increase in America, a new breed of criminal is on the rise - the predatory lender. Predatory lenders target specific groups; the elderly, immigrants, and people struggling to pay bills are all at risk.
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Recent headlines about the troubled subprime lending industry are making Americans more aware of the consequences of risky lending practices. But unscrupulous lenders and scam artists continue to prey on unsuspecting loan shoppers and homeowners.
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This process will be quicker and easier if you have a clear picture of your finances. Decide ahead of time how much of a down payment you can make, and what kind of monthly payment fits your budget. That will help you easily eliminate loans and lenders that don't fit with your needs and what you're able and willing to do financially.
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The best way to determine if the fees you.re being charged are fair is to compare them before you ever decide on a lender or loan.
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