The sub-prime mortgage loan market has made home ownership possible for many people with less than perfect credit and for others who otherwise can not qualify for prime, conventional loans. However, because sub-prime loans are largely unregulated by the federal government, some lenders engage in predatory lending practices. Lenders engaging in predatory loan practices are known as “predatory lenders”.

Predatory lending describes fraudulent, unfair and deceptive practices which strip mortgage loan borrowers of home equity and lead to higher instances of foreclosure. The Center for Responsible Lending estimates that predatory mortgage lending costs Americans more than $ 9.1 billion each year. Are you a victim? Here are some common signs:

Excessive Fees: Because points and fees are generally financed, it’s easy to downplay or otherwise hide them. Typical origination fees and points amount to about 2% of the loan.Total points and fees of 4% or more if the loan is for $ 20000 or more, are considered excessive.

Prepayment Penalties: Less than 2% of prime market loans contain them, but 80% of sub-prime loans do. A common example of a prepayment penalty is six months’ interest on prepayments made in the first five years of a loan, which can cost thousands of dollars.

Excessively High Interest: If the loan carries an interest rate of 6% or more than the yield for Treasury securities of the same term, it’s a sign of predatory lending. To put that in English, on April 13, 2001, the yield for 30-year Treasuries was 5.59 percent. Add 6.5 percent to that and you get 12.09 percent. So in May 2001, a high-interest loan on a 30-year mortgage would be defined as having an interest rate of 12.09 percent or higher. It’s predatory if it involves fraudulent sales practices, it refinances another high-interest loan and the borrower does not offer a better deal than the old loan or it carries a “balloon payment” at the end of the term.

Kickbacks to Brokers (yield spread premiums): On many subprime mortgage loans, brokers receive a kickback from the lender & known as a yield spread premium. “The higher the interest rate, the more the more the broker gets. Borrowers This costs an additional $ 800 to $ 3000 per loan.

Loan Flipping: Some mortgage originators refinance borrowers’ loans repeatedly in a short period of time, charging high fees each time.

Other practices include, adding unwanted loan insurance products (insurance packing), requiring mandatory arbitration and the practice of steering and targeting - steering those who are perceived as less financially sophisticated into sub-prime loans. Fannie Mae has estimated that up to half of sub-prime borrowers with mortgages could have qualified for loans with better terms.

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One should never accept a mortgage strictly at face value. By signing the mortgage loan paperwork, you should know the interest rate to be paid for every month after that for the duration of the mortgage. But the interest rates of mortgage loans are not always as attractive as it looks. Very few people are aware that most of their monthly payments actually go to your mortgage interest.

When you take a 30-year mortgage for the loan of 100000 dollars, the total amount payable is $ 300000. $ 100000 is used as payment for the principal balance of mortgage loans. But the remaining $ 200000, what part of your mortgage loan made to go? You guessed it - interest. Most of the payments on your mortgage actually go to the pockets of interest and its lenders.

Now, here is another thing to consider when purchasing a mortgage. Moving is a common trend in the United States. The average person in the U.S. Moves every 7 years or so. Go to a new house usually means obtaining a new mortgage to cover the cost of the new home. It’s an endless cycle. And with interest payments representing 91 percent of their monthly mortgage payment, it is a vicious circle.

Think about 30 years of mortgage fixed rate dollar 100000. The interest rate for this loan is 7 percent. If you move after 5 years, which still have a mortgage balance of $ 94000, 94 percent of the original amount.

Over the course of five years, paid several thousand dollars for his mortgage, but only ended up paying only $ 6000 of their mortgage loan, and the rest was spent on interest. The 86 percent of their mortgage loans is what we are still, even after a decade, or 120 payments. To pay 50 per cent of their loan, you need about 20-25 years of mortgage payments. That’s how much a mortgage required to repay.

And if you think that a mortgage will help you with your taxes, think twice. Mortgage Loans lack around a dollar of interest to you while you back only about 28 cents of tax deductions.

Instead prepay their mortgages, some people use their incomes to jumpstart a return on investment. But the problem with investments is that there is no sure fire way to adopt to achieve success. You can be lucky or you could go broke. It is a very risky business to invest their money in the stock market to pay off their mortgage loans.

Now do not let this image on the mortgage loans worry you and you stay away from them for the rest of their lives. The truth of the matter is, mortgages are a part of life. How can we leave behind barriers mortgage? Saldar their mortgages early by paying more than the minimum payment. By paying extra once a year, can eventually eliminate 8 years from 30 years of mortgage.

Perhaps the most intelligent way to enable it to succeed in its monthly payment mortgage loan is through a bi-weekly mortgage loans. With a bi-weekly mortgage, your payment is made every two weeks for half their monthly amount. At the end of the year, will be noted he has made 13 monthly payments instead of 12.

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After hours of research, I have compiled a list of Altanta Hard Money Lenders for your perusal. Links do not constitute an endorsement of any lenders listed below. Please do your own due diligence.

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