Your home is one of the biggest investments of your life, and your mortgage loan is the bedrock of that investment. So it’s important to educate yourself, compare lenders and loans carefully, and take your time before you sign on the dotted line. Risky, unfair loans are the exception, but they’re out there.
Fortunately for homebuyers, shady lenders often give themselves away, and you’re going to be smarter than they are. Watch for these red flags.
How to Spot a Bad Loan
Risky, unfair loans are the exception, but they’re out there. Shady lenders often give themselves away. Watch for these red flags. And ottom line: Educate yourself, compare lenders and loans carefully, and take your time.
6 Red Flags
- The lender contacts you first. Most legitimate lenders don’t solicit business.
- They use high-pressure sales tactics. That’s your cue to walk out the door!
- They push you to apply for more than you can afford.
- They encourage you to use high-risk loans with promises to refinance later.
- They discourage you from reading loan documents or ask you to sign incomplete forms.
- They charge high rates, fees, closing costs, or penalties.
