Acquiring a mortgage loan is one challenge but keeping up with your mortgage payments is another.  If you are currently in the middle of your mortgage repayment, congratulations! You are on your way to owning a house and you have definitely made the right investment.  Now all you need to do is complete your repayment to ensure that you won’t have any problem with your mortgage.

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Do you plan to apply for a home equity line of credit?  If yes, check out the following mistakes and how you can avoid them:

1. Not being aware of the pre-payment penalty clause. Lenders often require a pre-payment penalty fee if the buyer decides to complete the loan payments before the end of the repayment period.  However, some lenders may impose an unreasonably high prepayment penalty to discourage borrowers from completing their payments ahead of time.  Thus, before signing up your contract, make sure that you are clear about your lender’s conditions on early payment.
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Trying to get a home loan can be a big challenge.  This is especially true for people who are unemployed.  Since a home loan involves a greater amount of financing, many mortgage loan companies prefer customers with an impressive record of employment.  But does that mean you can never qualify for mortgage refinancing if you are jobless?

Bad Credit Home Loans for the Unemployed

If you are presently without work, then you are not alone.  Because of the recent economic slump, many industries have been badly affected, including big corporations.  To survive the market, many companies had to cut down the number of their employees while others have no other choice but to shut down which explains why thousands of people were left without a permanent employment.
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With cases of predatory lending ever-increasing, everyone is warned against dealing with such companies. Your best defense is the knowledge and awareness against their deceitful tactics. Check out the following abusive practices that predatory lenders do and steer clear from such companies.

Unreasonably High Costs

Usually, when looking for possible lenders, people are looking for a company that offers the least rate of interest. However, predatory mortgage lending companies may entice you with low interest. What they’re not telling you is, you’ll be paying other fees that can cost as much as 10% of your actual loan amount. These other fees come in the form of initiation fee, processing fee, administrative fee and others. If you don’t ask your lender about the exact cost of these fees, you’ll end up paying for more than you bargained for.

Expensive Prepayment Penalty Fees
Predatory mortgage lenders especially those who offer sub-prime loans impose expensive prepayment penalty fees on their clients. If you attempt to pay off your loan earlier, you have to pay an additional cost which can be very expensive. Thus, rather than paying off your loan early, you might have no choice but to stay within your payment terms just to avoid paying for such unreasonable penalty fees.

Watch out for dishonest brokers

Be on the watch for brokers who try to sell you a loan with unreasonably high interest rates. These brokers get a kickback from the lender each time they close a sale, so they can get very creative just to get you to sign up for a loan. In addition, it may be hard to resist these people because they’re very friendly, smart and they’re really good at convincing people. So be extra careful when dealing with brokers.

Misdirecting Borrowers

Some lenders can make you believe that you are not qualified for a standard loan. They may tell you that you can only qualify for sub-prime mortgage which of course come with higher interests and fees. Let the lender know that you are aware of your standing. To be sure, personally check on your credit report. If you find that your credit rating is indeed low, perhaps you would want to allow more time to improve your credit score before applying for a loan. Nevertheless, do not let a lending company fool you into believing that you’re not qualified without personally verifying this information.

Mandatory arbitration
This is a clause that is included in your contract. It means the borrower cannot seek legal assistance if in case they want to file a complaint against the company. This puts you at a greater risk of being taken advantage of because you cannot take the matters in court. For this reason, everyone is warned not to sign any contract without a reputable lawyer making a check on the legalities and correctness of the terms and clauses included in the contract. If you’ve already signed the contract, you don’t have much choice but be bounded in its terms.

A hybrid mortgage loan is both a fixed-rate loan and an adjustable-rate loan. With a hybrid mortgage loan, the interest rate you will be paying during the first five or ten years of your payment term will have a fixed rate. Afterwards, adjustable interest rates will apply with the rest of your payment term period.

Types of Hybrid Loans

The first type of hybrid loan applies a low fixed interest rate during the initial period. Available terms can be 3/1, 5/1, 7/1 and 10/1 periods. For example, with a 3/1 period, you will be paying for a low fixed rate of interest for the first three years. And for the rest of your payment term, adjustable rates will apply. Thus, in a typical 30-year payment term, you will be paying for adjustable rates for the remaining 27 years of your mortgage loan.
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