7 Warning Signs of a Bad Loan

Some valuable information when shopping for a loan…
When shopping for a loan, look for some of these bad warning signs – and be prepared to run – not walk – away from the table, from any lender who does the following dubious actions.
1. It’s Okay to Fudge Some Numbers
If your lender is trying to get you to lie about your income in order to bet a bigger loan, stop dealing with that lender immediately.
There is no such thing as a little lie when borrowing money: it’s mortgage fraud, and it could get you slapped with steep penalities or even jailed.
2. Pressures You Into A Bigger Loan
Beware of any lender who pressures you into borrowing more money than you need. You will likely pay more in interest on the extra cash that you’d earn in interest by stashing it away into a savings account.
3. Doesn’t Consider Your Monthly Income
Figure out whether you have enough coming in to cover all your monthly bills, a new mortgage and a savings account for emergencies. Know that number and stick to it – if a lender starts pressuring you into a bad loan with monthly payments you know you can’t afford, get out. If your outflow is more than your inflow, you will find yourself in trouble rather quickly.
4. Doesn’t Disclose Documents
Beware of any lender who fails to provide you with the required loan disclosures or tells you don’t need to read them.
By law, lenders have to tell you the annual percentage rate (APR) plus provide a good faith estate (GFE) – an itemized list of estimated closing costs within 3 days after you apply. The APR includes not just the interest rate, but also points, broker fees and certain other credit charges. The GFE covers these charges as well as everything else you’ll be asked to pay at settlement.
You should use these documents to loan shop.
5. Promises One Thing, Delivers Another
If you are presented one set of terms when you apply for the loan and a different set at closing, you should demand an explanation. If could be a bait-and-switch scam, where the lender is trying to pressure you into signing these new documents with worse rates or unfavorable terms. Be prepared to walk away and take your business elsewhere.
6. Says it’s okay to Leave or Sign Blank Forms
If you leave blanks, a scamming lender could fill in extra terms and conditions that could alter your loan – and not for the better.
Worst-case scenarios could have lenders who write in clauses surrendering the title of your home.
Don’t let anyone fill in the blanks later. If there is a blank, cross it out and initial your mark.
7. Doesn’t Provide Copies
Lenders may not give you the actual filled-in papers in advance, but they should give you blank documents so you can take them home to review or show them to a trusted advisor. If the lender won’t give you copies of what you’ve signed at closing, cancel the deal right then and there. These papers contain important information about your rights and obligations, and you need them.
source by: Lew Sichelman