Real estate agents and mortgage advisors are in an ultra-competitive and cutthroat business wherein making money is the ultimate goal. Though the customer rights should be respected, some lenders find ways to bend the rules and setup mortgage traps to cash in on their gullible and naïve clients. It’s difficult to say but some of them blatantly lie in order to take advantage of them. We have to understand that mortgages can be quite expensive at times so falling prey to their modus operandi can be financially draining on our part. It is difficult to get away from such financial responsibility once we fall to these mortgage traps. Make sure you check out the important details of the house you intend to buy in a property search portal before you decide to get a mortgage.
You will later realise that the real estate agent that you trusted has duped you so you have to pay the unforeseen costs of getting a mortgage in the first place. We hate hidden costs and extra charges but lenders have become so crafty that they can just slap huge bills on unsuspecting clients. If you are the client, make sure you know how mortgage works for you. Get to know the tricks of the trade employed by dodgy mortgage advisors too! Get all the help and advice that you can get because arranging a mortgage can be confusing and stressful process. If you are reading the terms and conditions, it is just like getting a death sentence because of the legalese terminologies and clauses.
1. Avoid Overcharging Lenders
Let’s face it, there are always unavoidable fees when you sign up for a mortgage but that doesn’t mean that you can’t avoid money-hungry, overcharging lenders. Learn the mortgage basics first so that you will know the tricks and deceptions played on you. Know how the negotiation game is played and take advantage of what you know before you sign the contract. It is advisable to ask questions on all the fees you need to pay, even how insignificant it is.
Some lenders may charge an arrangement fee to pay the cost of setting your mortgage while others prefer a flat rate. Take a particular interest on low interest loans with high arrangement rates and read the fine print.
2. Never Go For Adjustable Rate Mortgages
It may be considered as a pariah in the financial circles because of its role in real estate foreclosures in recent years but many people are attracted by the low initial interest rates offered by lenders in adjustable rate mortgages. If you know about adjustable rate mortgage basics, you will realise that your payments would go up once the interest rates increase. Once your budget is stretched beyond breaking point then you won’t be able to afford higher mortgage payments.
3. Don’t Signup for Interest Only Mortgages
Without a doubt, interest only mortgages facilitate the growing demand by people that can truly afford to buy homes. Although the mortgage holder can make the interest payment of the loan for the initial year of the agreement, the succeeding years become a different story. Unlike the adjustable basics mortgage rate, payments on the principal and interest become due once the principal of the loan reach a certain percentage. Payments may go beyond the means that the mortgage holder can afford.
4. Insurance Issues
Lenders require home insurance as part of the condition for loan approval. In this arrangement, the lenders are noted as mortgagee and coinsured party in the insurance policy. Sometimes they require you to get mortgage repayment insurance or lenders mortgage insurance as a way to protect the lender if you can’t repay the loan. Make sure you know which insurance policies suits your mortgage terms and conditions.
5. Fishreel Baiting
Just like any crooked salesmen, some lenders may offer outrageously low interest rates that are too good to be true. It may sound tempting but many people do fall in to this trap from time to time. Once you fall to the bait, they immediately change the rate to the last minute. It goes away from the basics, mortgage holders have signed on.
6. Mortgage Payment Holidays May Work Against You
If you think that taking a temporary time off from your mortgage obligations can give you time to settle your finances, think again! The true cost of your mortgage payment holiday may be higher than expected. Home mortgage basics suggest that the interest is added to your mortgage thereby increasing the amount of capital you owe to the lender.
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