When looking to buy some land for sale on Donnybrook Road, chances are you’ll take a loan from a mortgage company to finance the purchase. In most cases, the loan is in the six-figure range, which makes buying property one of the most significant investments you’ll ever make.
Before committing yourself to such a large purchase, you need to be sure that you’re working with a lender you can trust. Here are five ways to know which lenders or brokers you need to avoid getting scammed.
The lender doesn’t bother about your ability to pay.
If a lender seems willing to give you a huge mortgage regardless of whether you’ll be able to repay the loan or not, then that’s a clear red flag. A reputable lender will have certain key questions about your finances to help you determine the size of the mortgage you can realistically afford. Generally, your mortgage shouldn’t be more than a quarter of your gross pay.
There are suspiciously high loan costs.
Certainly, there are several other costs that you’ll incur throughout the mortgage application process. These costs are usually fixed regardless of the size of the loan you are taking. In the majority of mortgages, closing costs range from 2% to 5% of the loan amount. If the percentage goes much higher than this, then you have the right to question why. Some agents inflate these costs to scam unsuspecting borrowers.
There are prepayment penalties.
While taking a loan, one of the questions you need to ask the lender is whether they charge any penalties for paying the loan earlier than its full term. If they say that you’ll be penalized, then walk away. At the moment, prepayment penalties are illegal, and any lenders that want to charge you a certain percentage for loan prepayment is scamming you unless there’s some reasonable explanation.
A broker won’t disclose how they are paid.
A reputable broker will have no problem letting you know how they’re being paid for the mortgage you are about to apply. Usually, the payment is a percentage of the loan a customer takes. If your agent or lender won’t disclose the figure they’re making from the mortgage, then it’s possible for them to add charges without your knowledge.
The lender is willing to inflate your income.
An agent who seems willing to falsify your information so they can help you qualify for a bigger mortgage is highly suspicious, no matter what they tell you. If they’re willing to lie to the bank, what makes you think that they’ll not also lie to you at some point during the loan application progress? And even if you do manage to get the loan they promised you’d get, you will not be in a position to afford it anyway. It’s the kind of lender you want to flee from early.
Scams are rampant in every industry around the globe, and the mortgage industry is no different. By being vigilant, however, you can avoid falling for unethical brokers and lenders out to get you into bad deals.
