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DECEPTIVE MORTGAGE PROFESSIONALS
Ever dealt with a lender and felt you had an interest rate locked-in only to
find out the rate has gone up BEFORE you end up closing on the loan? It could
be financially beneficial to the lender to let your paperwork lapse until the
time comes that interest rates go up. However, any reputable lender would honor
and extend your originally agreed upon interest rate and not hit you with the
newer, higher rate!
If you respond to an advertisement offering "come-ons" like "no money down",
"no closing costs" or any kind of enticing offers, like a free big-ticket item
or valuable merchandise, just to get your business you likely will end up paying
for it over the course of the entire loan WITH INTEREST! Never believe the
lender is simply giving things away free. You will likely pay for it somewhere
down the line.
In fact, the lender may actually earn more by offering perks and premiums
because he can add these into the total cost of the loan and collect interest on
them for the duration of the loan costing you ten times as much as their true
value over the course of the loan and you thought they were free!
Beware of so-called mortgage consultants who try to get you to sign over the
deed to your home to the consultant's firm supposedly to help you continue
making payments on your home so you can avoid foreclosure. Unfortunately, you
may find yourself evicted and the consultant ends up taking your home legally if
you sign over the deed!
Only consult an independent professional or legal aide for guidance or
assistance and NOT one involved in your business deal especially when the deed
to your home as well as the equity in your home are at stake.
Money lenders, banks even car dealers may try and sell you overpriced, often
unnecessary insurance coverage without you even knowing it. This "hidden"
coverage may not be made known to you upfront before you do your deal with them
otherwise you likely would have asked them to delete the coverage from your
monthly payment. By law, they are supposed to disclose all contract details but
do not always count on it.
Second mortgages as investments are risky especially when they promise high
interest income. If you do invest here watch out for property owners who are
poor credit risks and property that may have another second mortgage already on
it which could be unrecorded! This unknown could leave you with no legal
recourse to recover your investment.
Furthermore, when looking for cash in an easy-to-get loan that requires you
to personally apply for a second mortgage, such as borrowing against your home's
equity, watch out for high interest rates, pre-payment penalties, balloon
payments and front-end fees which you will find out later you cannot afford,
potentially leading to foreclosure on your home and loss of equity!
SUPPLEMENTAL SOURCE: CONSUMER REPORTS MAGAZINE MAY 1996
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