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Four Red Flags to Watch for When Looking at Lenders

Borrowing money to buy a house, do home improvements, or anything else can help you improve your financial situation. However, obtaining that money might be a daunting task. Doing your homework, such as studying your credit report and monitoring your credit score, will alleviate a lot of your anxiety.

Before you apply for new credit, check with the lender to see if any red flags could indicate a problem. Keep the following four red flags in mind when choosing a mortgage broker. Paying attention to these warning indicators will help you avoid shady lenders and direct you to the ones who are real.

1. They Try Rushing You Through the Loan Process

Lenders who are dishonest will frequently pressure you to sign loan papers without thoroughly reading them. Alternatively, they may advise you to simply disregard all of the fine print. If you come across a lender who is pushing the process ahead too quickly, it is possible that they do not want you to notice language in the lending agreement that benefits the lender rather than you. You probably don’t want to do business with a lender who doesn’t give you enough time to thoroughly understand the details of a loan before you sign the loan agreement.

2. Interest Rates Are Way Different Compared to Other Lenders

You believe you’ve found a mortgage broker with interest rates that no one else can match. However, in other circumstances, those rates come with conditions. A mortgage lender, for example, might offer a super-low interest rate—but only for a limited time, such as 30 days. After the introductory term, the interest rate jumps dramatically, implying that borrowing money for a property purchase will cost you considerably more than you anticipated. Look for written confirmation of the loan’s annual percentage rate to avoid this type of scam.

3. Tell You to Leave Out Information

You’re filling out a loan application with a lending professional when they tell you to inflate your income and leave a few sections of the application blank. In other words, this person is requesting that you lie and refrain from providing additional information. This is a red flag that you’re dealing with a shady company or loan officer. Worse, you could be punished with a crime if you’re detected faking a loan application.

4. Won’t Answer Your Questions

It’s common for a borrower to bombard a lender with queries such as “How much time do you think I’ll have to repay the loan?” “If I pay off the loan early, will there be any penalties?” and “What will the APR be?”

However, it is unusual for a lender to refuse to answer your queries. A professional lender like Canadian Mortgage Services will spend the time necessary to ensure that you understand all of the terms of a loan. On the other hand, if a lender avoids your questions, they may be concealing something. This should raise your suspicions and make you reconsider taking out a loan with this lender.

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