Exercise Extreme Caution When Buying a Mortgage

Everyone will remind you to be mindful when shopping for a mortgage. Yet, it is equally as important that one be cautious when actually sitting down to sign the paperwork on the mortgage plan deemed most desirable.

As there are more than 55 individual documents that must be signed with any given mortgage, there are latitudes of opportunity for deception and fraudulent activities. The particular element that stands out as an area over which to carefully scrutinize is the fine print listing the additional fees being added onto your new mortgage and terms regarding interest rates.

These two particular ‘danger zone’ have the culpability of transcending your loan from a reasonable costing agreement into a costly, exacerbated commitment.

First off, lenders can tack on additional charges for everything under the sun from closing costs to processing fees without you even being aware of these extraneous fees. Furthermore, many of these are questionable practices rather than required additions. Once though you sign all these documents, you are essentially giving your permission to be billed for these ancillary services.

Second, there is the notion of teaser interest rates designed to initially lure in new customers interested in securing a below-market rate on their mortgage. However, the hidden component of teaser rates is that they only remain at the rock bottom low rate for a specified, short-term period. Once that period has passed, rates are liable to escalate to the level to which the agreement states they are capped.

Yet, without reading the fine print or understanding this impending progressive structure, borrowers are bound to be unpleasantly surprised when their rates start to increase after the allotted introductory period.

Though it is the honorable duty of the lender to explain these terms, it is ultimately the customer’s responsibility to ask the pertinent questions as to how interest rates are incorporated into the policy. Specific areas to probe include: Are interest rates fixed or do they fluctuate based upon market activity? Does the plan have a built-in cap with respect to how high interest rates can go?

Often times, rates listed in print are only available to those with unblemished credit. Thus, once again, it is important to clarify the rate at which you are getting your loan, the length of time for which the rate will apply and the ability you have to negotiate the terms.