A challenge with mortgage shopping is that the loan provider knows more about mortgages than most borrowers. Predatory lending is characterized in each state differently, but is defined by the Federal Trade Commission as “imposing unfair and abusive loan terms on borrowers.”
Even though most mortgage lenders have your best interests in mind, it’s important to know how to protect yourself.
Attend a homeownership course. HUD-approved agencies offer group courses that provide education completion certificates that can be useful for down payment assistance programs. Make an appointment with a certified homeownership counselor. Private counseling sessions cover an array of areas related to the skills, knowledge and confidence necessary to select, finance, buy and maintain a home.
Know Who You’re Working With
Before selecting a real estate professional or lender, get references and interview candidates. Be suspicious if anyone is trying to discourage you from comparison shopping.
If you don’t understand something, don’t sign it. Don’t be afraid to take questions to someone you trust. Don’t be harassed into signing something that you’re uncomfortable with and never sign blank documents.
Making False Statements Is Fraudulent
Obtaining a mortgage loan under false pretenses is considered loan fraud. The servicer can accelerate the loan, making it due and payable immediately. Be honest about your loan application. Don’t let anyone talk you into making false or incorrect statements.
Get a Home Inspection
A home inspector determines the condition of a structure and will check the roof, basement, heating system, water heater, air-conditioning system, structure, plumbing, electrical and many other items. The inspector looks for improper building practices, those items that require extensive repairs, items that are general maintenance issues and some fire and safety issues.
Quick Tip: Recognize "Bait and Switch" Fraud
“Bait and switch” is a form of fraud where the lender lures in customers by advertising a product or service at a low price, then reveals that the advertised good is not available or different.