Mortgage Center
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Print out the latest Mortgage Rates.
Get
Pre-Qualified!
Complete a Pre-Qualification form. A loan officer will communicate the
maximum loan amount for which you may qualify, based on the information
you supply about income, assets and credit standing. This short form is
not a full loan application, and therefore does not represent a loan
commitment or Pre-Approval to you.
Get
Pre-Approved!
Complete a Pre-Approval Application. A Pre-Approval allows you to shop
for your new home with confidence, knowing that your mortgage loan has
been Pre-Approved. The Pre-Approval Application asks all of the
questions needed to be approved for your mortgage loan, even though you
have not found your new home yet. Be prepared for questions on
employment, income, assets/savings and monthly debts/liabilities.
Pre-Approvals are valid for 120 days and can easily be extended.
Pre-Approvals are frequently requested by Brokers and Sellers as proof
that you are a qualified buyer.
After you find the right house or property, it's time to secure
financing. Use the Full Application when you're ready to apply for loan
approval. You can save an incomplete application and finish it later.
How to Avoid Predatory
Lending
For most families, buying a home is the biggest and smartest purchase
they ever make. Unfortunately, not all loans are in their best interest.
When
loans hurt instead of help, they can quickly lead to foreclosure and
even bankruptcy. It's important to learn the warning signs and common
problems associated with predatory lending, and to ask the right
questions when shopping for low cost loans.
The term, "predatory lending" covers a
wide range of abusive practices. Some may be predatory for one borrower
but not for another, because everyone's circumstances are different.
Predatory lenders often take advantage of first-time homebuyers and
others who may be vulnerable to high-pressure sales tactics, so it pays
to know how to protect yourself and who can help.
Possible warning signs of a predatory loan
- It sounds too easy:
"Guaranteed approval" or "no income verification" sometimes indicate
that the lender doesn't care whether you can afford to make the
payments over the long haul.
- Excessive fees:
Make sure fees are typical of those in your market. Because these
costs can be financed as part of the loan, they are easy to disguise
or downplay. On competitive loans, fees are negotiable. It is common
for home buyers to pay only one percent of the loan amount for prime
loans. By contrast, a typical predatory loan may cost five percent
or more.
- Large future costs:
High-risk adjustable rate mortgages with payments that rise
substantially after a short introductory period are seldom
appropriate for families who already have had problems repaying
other loans. Home buyers should also avoid a large, single "balloon"
payment (a lump sum due at the end of the loan's term).
- Closing delays:
A lender who deliberately delays the closing may be waiting for the
commitment on a reasonably-priced loan to expire.
- Over-valued
property: Inflated appraisals can
allow for excessive fees to be included in the loan, resulting in
the borrower owing more to the bank than the home is worth.
- Barriers to
refinancing: Prepayment penalties can
make it hard for borrowers to refinance and take advantage of a
lower-cost loans.
- No down payment
loans: These loans may be split into
two mortgages, with one having a much higher cost. Home buyers
should be sure they can afford the payments.
- Unethical document
management: An ethical lender or
broker will always require you to sign key loan papers, and they
will never ask you to sign a document dated before the date you sign
it.
Some common problems associated with predatory lending
Nearly all predatory lending occurs in
the "subprime market," where loans are sold to people with less than
ideal credit histories. Subprime loans have played an important role in
helping millions of consumers achieve homeownership, but, unfortunately,
some lenders abuse their role and take unfair advantage of vulnerable
borrowers. Here are some common problems with predatory loans:
- High interest rates
and fees: Predatory lenders often
charge extremely high interest and fees that are added into the
total amount of the loan the borrower must repay. These lenders
charge what they can get away with, not a fair amount based on the
credit history of the borrower.
- Broken promises &
bait and switch: Sometimes hosme
buyers are offered a new loan or a refinance of an existing loan
that seems to meet all of their needs--only to find that interest
rates and fees have changed when they get to the closing table.
Agreeing to last-minute changes can cost thousands of dollars and
result in a loan they just can't afford.
- Loans that start low
and go high: Adjustable rate loans
are popular in today's market, but many that seem affordable are
likely to have steep cost increases in the future. Avoid "payment
shock" by considering whether you can pay for the loan both now and
in the future.
- Loan "flipping":
Too many homeowners are persuaded to refinance their mortgage,
sometimes repeatedly, when there is no real benefit. Even when a
family receives some cash from a refinance, the gains should be
weighed against the costs of excessive fees and a higher loan
amount.
- Steering:
Some families who receive subprime loans could qualify for a much
more affordable home loan. Predatory lenders use aggressive sales
tactics to steer families into unnecessarily expensive loan
products.
Ask the right questions when shopping for the lowest-cost
loan
REALTORS® develop relationships of
trust with the families they serve, and can help you avoid predatory
loans by encouraging careful shopping. Ask these important questions:
- What is my credit score? Can I
have a copy of my credit report?
- What is the best interest rate
today? Do I qualify?
- Is the loan's interest rate fixed
or adjustable?
- What is the term (length) of the
loan?
- What are the total loan fees?
- What is the total monthly payment?
Does this include property taxes and insurance? If not, how much
will I need each month for taxes and insurance?
- Is there an application fee? If
so, what is it, and how much is refundable if I don't qualify?
- Are there any prepayment
penalties? If so, what are they and how long do they last?
If the loan is an adjustable rate
mortgage (ARM), ask:
- What is the initial rate?
- How long will that rate stay in
effect?
- How is the adjusted interest rate
determined? (Generally, a specified amount-the "margin"-is added to
a current published rate-the "index.")
- How often can the rate change?
- How much can the rate go up each
year and over the life of the loan? What is the maximum monthly
payment you could be required to pay? Would you be able to afford
it?
- Does the loan set a minimum
interest rate?
- Do the monthly payments gradually
decrease the amount you owe even if interest rates increase? (With
some loans, the amount you still owe can increase rather than
decrease each month-called "negative amortization.")
- Does the interest rate increase if
your payments are late?
- Could you qualify for a loan with
the maximum interest rate permitted under the mortgage? If not, do
you anticipate earning more in the future so you will be able to
afford the higher payment?
- Can the adjustable rate mortgage
loan be converted (changed) to a fixed rate without refinancing into
a new loan? Is there a charge to convert?
Other ways home buyers can protect themselves from
predatory lenders
- Check out lenders with the Better
Business Bureau, government websites, or other consumer groups. How
long has the lender been in business? Have consumers filed many
complaints? Does the lender belong to a trade association with
ethics requirements for its members?
- Refuse to participate in
transactions that may be fraudulent.
- Share predatory lending "horror"
stories with regulators, other consumers, REALTORS®, counseling
groups, housing professionals, and the media.
- Make contracts subject to the
homebuyer receiving approval from a lender for a fair and affordable
loan.
- Avoid unnecessary contract
extensions that could cause the lender's loan commitment to lapse.
- Get educated on the value of your
home by asking your REALTOR® for a comparative market analysis.
- Review the HUD-1 closing statement
before closing. Upon request, home buyers have the right to see this
information 24 hours before the loan closing.
- Report possible violations to
appropriate federal, state and local officials.
This information is from the
brochure, "Shopping for a Mortgage? Do Your
Homework First," published by the NATIONAL ASSOCIATION OF REALTORS® and
the Center for Responsible Lending.
Download the brochure (1.2mb PDF)
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Jeff Bolander, REALTOR®
Northern Wisconsin Phone
715-892-2751
Northern Wisconsin Office
PO Box 2089
Woodruff, WI 54568-2089
715-892-2751
4sale@jeffbolander.com |
Southern Wisconsin Office
8405 W. Lisbon Avenue
Milwaukee, WI 53202
(414) 461-4040
Fax (414) 461-9568 |
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