That article is about Getting a Bad Credit Mortgage Refinance Loan? Don’t get ripped off! So despite having bad credit, you have decided to refinance your mortgage. Good for you! Rates are down and the banks and mortgage companies have incentives from the government to work with borrowers. These incentives are to help lower the interest rate and possibly reduce the amount of the loan outstanding.
You will obviously search the internet for mortgage companies that provide bad credit mortgage refinances, but be careful, there are a bunch of scammers and rip-off artists out there looking to screw you out of your hard earned money. This article will tell you what to watch out for and how to protect yourself while shopping for a mortgage.
First thing to watch for are advertisements sating they are a government agency. In fact you may have already received mail from an official sounding agency or mortgage company. These companies might not in face be your lender or an official government department. The letter may say something that looks official like this: Important Notice From Your Mortgage Company. Or something like Important Financial Information Enclosed-Do Not Discard.
These may look all official but are probably not from your kinder at all and are from a mortgage company looking to get your mortgage. These letters may even tell you what your mortgage payment is and what your loan balance is. How do they get that information? It’s all in the public records in your county. Before doing business with them, check to see if it is your mortgage lender and not just a sales brochure from another mortgage company.
Another scam is the official government looking envelope with forms and markings that make it look like it came from a government agency. It might say something along the lines of You may be eligible to take pat in an exclusive interest rate reduction, this bank has been licensed by the government to negotiate your existing adjustable rate mortgage into a fixed rate mortgage. The envelope might come to you with references or a seal on it to look like it’s fro the government. Odds are it isn’t. The simple way to check is to look in your phone book in the blue pages. If the agency listed in the mailing isn’t there, then its some mortgage company looking for your business.
Watch for Deceptive Mortgage Ads
Here are some phrases you’ll see in ads to entice you, but let’s examine them closer and see what they really mean.
Mortgage rates at 30-year lows! Rates as low as 1% Pay only $700 a month on a $250,000 mortgage!! With rates current around 5%, 1% sounds great. But it’s a teaser. This rate will only be for a very short time, perhaps for the first 3 months. After the 3 months that rate will suddenly be jacked up and you will be in for payment shock. To protect yourself, you need to careful check what the interest rate is and payment will be for each month of your mortgage. This has burned many people. They thing the tease rate was for the life of the mortgage and found they couldn’t pay their mortgage after the rate shot up.
Low Fixed Rates! Once again, sounds good. But the question you need to ask here is how long is the fixed rate? Some unscrupulous lenders will offer you a fixed rate for as little as 30 days, then change the rate on you. Again, you must know what the rates and payments will be for the entire length of the mortgage.
Super Low Payments! This one has hurt borrower more than anything else. You will see a quote for a low payment. Here you have to ask the following question. What does that payment cover? Some lenders advertised low payments, but the payment was only for the interest on the loan. People were making payments, but none of the payment went to lower the outstanding principal amount. Some loans didn’t even cover the interest portion and that amount was added to the total mortgage. Homeowners found they were making monthly payments, yet the mortgage balance was going UP instead of DOWN!!
These are the main things to look for when you go for a mortgage on the internet. Now that you know what to watch out for, you can obtain a bad credit mortgage refinance loan with confidence.