Different mortgage lenders offer loans at various rates and terms, but not all of them have your best interests in mind. Some may be looking to take advantage of unsuspecting homeowners who don’t know any better. If you’re dealing with predatory lenders or unsure about their legitimacy, here are four indicators that should raise your suspicion:
1) Penalties for Paying off Early
If your lender tells you that you’ll be penalized for paying off your loan before the end of its term, this may indicate a predatory mortgage. Loans are typically set up to be paid back early without any penalties.
Some lenders may try to tell you it’s impossible to pay off earlier because their “fine print” says so – don’t fall for these tactics! Predatory lenders have been known to use exploitive tactics like this to keep people stuck with loans longer than necessary and collect interest fees from them until the very last day. It is possible to refinance if you find yourself being forced into buying points or other risky options to get rid of an unwanted penalty clause.
It’s in your best interest to research and apply for a loan with credible lenders like Fundwise in Chicago, IL.
2) Brokers Charging Inflated Interest Rates
Predatory lenders often take the form of brokers who are not honest about what is being offered. They charge excessive interest rates and fees, taking advantage of borrowers’ lack of knowledge about current market values.
If you feel like you’re paying too much or your broker seems unwilling to negotiate a better deal, it’s time to find another one! Brokers don’t always make money off their customers – they may rely entirely on commission from sales which encourages them to stay loyal to certain companies that pay well even at inflated costs.
3) Targeting and Steering
Predatory lenders often target older citizens and disadvantaged segments to convince them to get an unfavorable loan. They are trained to spot a potential customer and get them to sign on the dotted line before they have time to realize what’s gone wrong.
One of the ways that payday lenders target their customers is by sending out flyers in neighborhoods with low-income residents. If you receive any unsolicited materials from an outfit promising high returns or cash advances without much information about how exactly these loans work, be careful because there may be something fishy going on.
4) The Promise of Refinancing
Predatory lenders prey on those who have trouble paying back their loans; they look for desperate borrowers they can easily convince into taking out predatory loans that only help the lender. These loans leave you in a vicious debt trap where you need more loans to repay the previous ones.
You can stay clear of predatory lenders by contacting credible lending sources with a reputation for working in the customers’ best interest. Fundwise is a reliable lender in Chicago, IL, that offers affordable home loans to users. We provide a range of business and personal loans helping our clients finance their dreams. Our quick application process and specific lending requirements mean everyone is welcome at our doorstep. Apply for funding now!