Wednesday, March 07, 2007

Avoid Predatory Lending

According to Policy Matters, a non-profit research institute, one in every 71 households in Ohio filed for foreclosure in 2005 — quite an astounding statistic. Predatory lending is especially prevalent among first-time homebuyers and consumers unfamiliar with home financing. How can you avoid the pitfalls of predatory lending as a prospective homebuyer?
According to the National Association of Realtors® (NAR), homebuyers need to ask the right questions when shopping for the least expensive loan. Questions such as:

*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 more will I need to pay for taxes and insurance?

*Is there an application fee? 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?

It's important to understand all the details of your loan before signing anything — and ask questions! Also, the NAR offers these other strategies that homebuyers can follow to protect themselves from predatory lending:

*Check out lenders with the Better Business Bureau®, government Web sites 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?

*Ask for an estimate and compare with other lenders.

*Refuse to participate in transactions that may be fraudulent.

*Avoid unnecessary contract extensions that could cause your loan commitment to lapse.

*Get educated on the value of your home by asking your Real Living agent for a comparative market analysis.

*Review the HUD-1 closing settlement statement before closing. This statement itemizes all charges imposed upon a borrower and seller for a real estate transaction. Upon request, homebuyers have the right to see this information 24 hours before the loan closing.

*Report possible violations to appropriate federal, state and local officials.

If you're considering a home purchase and want to make sure you'll be safe from predatory lending, working with a Real Living agent is a wise move. Contact me or visit for more information.

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