Buy Smarter: Recognize and Avoid Predatory Lending
The process of buying a home can feel overwhelming, especially when it’s coupled with today’s high home prices. Before making such a significant purchase, it is essential to find home financing you can trust to be affordable and maintainable by recognizing and avoiding predatory lending.
Predatory lending is any deceptive, unfair and fraudulent tactic used by a financial institution to trick borrowers into loans they can’t afford. Often with predatory lending, borrowers are burdened with high fees and interest rates, deprived of their home’s equity, or placed into an expensive, lower-credit loan when they in fact qualify for a better rate.
No matter where you are in the homebuying process, ensure you don’t get taken advantage of by:
Learning how to spot a scam.
Is the interest rate too good to be true? Is the lender pressuring you to act fast? Will the fees or terms suddenly change without good reason? These can all be signs of predatory lending. Resources like Investopedia offer tips for spotting such red flags. And, INHP offers classes – many free of cost – to help homebuyers better understand their finances to buy a home at an affordable rate.
Checking with the Consumer Financial Protection Bureau (CFPB).
This U.S. government agency monitors banks, lenders and other financial institutions to ensure honest business practices. The CFPB focuses on protecting borrowers by enforcing consumer protection and anti-discrimination laws, examining financial markets for new predatory risks, capturing consumer complaints, and enhancing financial education. The agency shares resources for homebuyers and clear, impartial answers to hundreds of financial questions. Chosen lenders can also be checked for potential issues in the Consumer Complaint Database.
Exploring your options.
Remember you always have choices – even if you’re facing obstacles like imperfect credit, debt or a limited down payment fund. INHP advisors offer one-on-one support at every stage of the homebuying process, including unbiased advice to help borrowers decide what type of mortgage might be best. As part of INHP’s Lender Options meeting, we can even introduce you to mortgage loan options offered by our lending partners.
Whether you’re looking for tips on budgeting or want to learn about home mortgage options, the trusted experts at INHP can provide you with tools to achieve homeownership and maintain your investment. To better understand where you are in your homeownership journey, schedule a homebuyer assessment at INHP.
