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Mortgage Loan Your Mortgage Lender and Their Dirty Little Secrets By Louie Latour

If you are in the market for a mortgage or a home equity loan, you need to do your homework before signing on the dotted line. There are a number of common mortgage mistakes that can cost you thousands. Many mortgage lenders rely on you making mistakes so they can charge you more. There are a number of gimmicks mortgage lenders use to trick unsuspecting homeowners into paying more.

Here are tips to help you avoid being taken advantage of by your mortgage broker or lender.

Prepayment Penalties

A prepayment penalty is a fee your lender charges if you refinance the mortgage or sell your home. This penalty usually only applies for the first five years of the mortgage; however, some lenders try and slip more stringent conditions in their loan contracts. The actual penalty varies by lender; however, you may be required to pay as much as six months interest on 85% of the original loan balance if you refinance or sell before the penalty expires.

Dont accept a mortgage with a prepayment penalty. If you have good credit there is no reason to choose a lender that uses this penalty. The mortgage industry is extremely competitive and your credit rating is an excellent bargaining chip for any mortgage company to have your business. If the lender refuses to remove the prepayment penalty from the contract, take your business elsewhere.

If you have bad credit you may be stuck with the prepayment penalty. You should negotiate with the lender for less stringent terms on the contract. If you can get the lender to lower the duration of the penalty to one year or set the amount to a lesser value you will be better of when you refinance to a better mortgage.

Discount Interest Rates

If you see a lender advertising a mortgage with an abnormally low interest rate, say three percent for example, this is a discount interest rate. Discount rates are used to lure in homeowners that dont know any better.

Discount interest rates are only good for an introductory period. At the end of the introductory period the lender will adjust the discount interest rate to the actual rate; this actual interest rate is usually buried somewhere in the fine print. When the lender adjusts the interest rate at the end of the introductory period the monthly payment goes up dramatically. These gimmicky types of mortgage loans often come with variable interest rates which may or may not have interest rate caps.

To learn more about mortgage lender gimmicks and how to avoid paying too much for your mortgage, sign up for a free mortgage guidebook.

To get your free mortgage guidebook visit RefiAdvisor.com using the link below.

St Louis Mortgage Refinance

Louie Latour is a mortgage professional and the owner of RefiAdvisor.com, a mortgage resource site offering a free gift for homeowners: "Mortgage Refinance: What You Need to Know." This guidebook helps homeowners avoid common mortgage mistakes and predatory lending practices.

Claim your free gift today at: http://www.refiadvisor.com

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