How does one look out for predatory lenders?

[AllyCat]

Is there one site that lists those who might have had complaints lodged against them? We are looking for our first home and many have ads for "0% down! Call..." on the for sale signs. One we keep seeing is GMAX.

Anyone know anything about these or this particular company? We really don't want to get hosed, but have NO experience doing this and need to find a home in the next month or two.

Thanks!

[demnan]

1. Ask your friends

surely someone you know has bought a house recently or refinanced. You should ask around in your area. Try to get a FannyMae sponsored loan. Don't go for an interest only loan if you can help it. And 0 down means a hell of a lot of points added to your closing costs.

[The Night Owl]

2. Google the lender and see what comes up.

[cornermouse]

3. Better Business Bureau and State Attorney's Office?

When I want a loan, I go to a bank or savings and loan company; one that's been in town for a few years.

[AllyCat]

11. Good call on BBB. Found it by entering the phone number

Actually called Metro Mortgage and have been local for nearly 20 years. They had a satisfactory rating with the BBB.

Of course, if we call them, we will use the advice from others about what is a red flag for a bad deal.

[SteppingRazor]

4. Watch out for credit companies based in Delaware...

the state's laws allow for fairly rapacious lending practices.

In general, here's a pretty good link:

http://www.responsiblelending.org/

[AllyCat]

8. Thanks! That had some good advice on how to watch for problems

I'll watch out for DE-based companies as well.

[AllegroRondo]

20. South Dakota is another bad one

home of Citibank - go figure.

[MemphisTiger]

5. If they state they give "great rates" even if you have bad credit

beware. If it sounds to good to be true, it probably is. IMHO, these are the worst in our socity. Like someone else said, check with the BBB .

[Neocondriac]

6. Seek out a credit union.......

they are pretty safe. Or like mentioned a FHA or VA LOAN.

[tk2kewl]

7. The old adage is always a good starting point:

If the deal seems to good to be true, it probably is.

[merwin]

9. Century 21 Mortgage has great rates and will match anyone else's rates.

http://www.century21.com/finance/

[AllyCat]

12. We called them, but...

they insisted on knowing if we had $6000 for closing costs on a $105,000 house. We could not get past this part of the application process and finally decided they were ripping us off. The guy made some comment like "you know, it costs money to buy a house". No S*** sherlock?

Is there a person there you would recommend? The guy we talked to was an a$$.

[merwin]

14. Indeed I do have someone to recommend.

John Fuhrmeister
Century 21 Mortgage
888-486-9661
x80286

I had to call them and have them look up who I worked with (it's been a year since I bought my house). He got me into a program to get my first home, $70k with only a tiny down payment and no mortgage-insurance. I forgot the interest rate, but it was pretty good.

[AllyCat]

18. Thanks! We'll try that nt

[merwin]

19. Hope it works out for you :-) He's been doing this for many years, so

if they can help you, he'll know how.

[beyurslf]

10. Watch out for Interest Only (IO) loans and Negative Amortization loans

especially. In the first you never pay the principal, only the interest. Usually, after a set period of years (3-8), your interest is re-set to the current rate, and you begin paying a normal loan, with much higher payments.

A neg am loan is even worse. These are the "name your own" payment type. YOu are paying less than the interest every month and no principal. The extra interest is added onto the mortgage at the end. After the set period is up (again 3-8 years) your payments begin increasing every month. In some a large balloon payment is due for the unpaid interest and in others it is all added on. The payments can more than double.

Go with a standard 30 year fixed rate mortgage unless you know you will move within the next 5 years. And ARM can be good then since it lowers the interest. Have 10% (at least) down. If you can get 15% it lowers the PMI. If you have 20% that is best since you won't have PMI then.

[AllyCat]

13. Do you ever hear those Manhattan West ads on Air America?

The guy is always talking about how sub-prime lending can be a good thing and 15 year fixed saves money...all the things that I read are red flags for a predatory lending firm.

We are not going to have at least 10% down and that is the problem. We are "growing" a family a little sooner than expected and didn't have that much saved up yet.

[beyurslf]

15. Well you will have high PMI. If you get under 90% it goes down and

under 85% it drops alot more. You stop having it at under 80%. A 15year is fine, but has a higher payment. I would always suggest a 30year for a first time buyer especially if they don't have that much saved up yet. You can lower your payment and save more each month. You could even go with a 5 year ARM, and work on saving more. This would lower your payments and at the end of the 5 year fixed period, you could either look the refinance or go with the adjustable amount.
You have to be honest with yourself though on that one. If you lower your payments by $75 a month, will make that extra payment to the house or spend it elsewhere. If you make the extra payment, it is good because you get out PMI sooner. If you spend it elsewhere, it may better not to do the ARM. PMI is the worst thing to pay and your first goal should be to get the mortgage under 80%.

[merwin]

17. I got a deal where I put 5% down, with no points or PMI, and a good rate.

I can't remember the exact rate, but my brother is a long time real estate agent for Century 21 and said it was good :-)

The way they did it was raise the interest rate by some miniscule amount... something like one tenth of a percent. I can't remember. In any case, it comes out to less than PMI and you can write it off (unlike PMI)

[AllyCat]

21. You can write off the higher interest....for now

I've heard the dropping of the mortgage interest deduction trumpetted all over the news lately. They are desperately trying to get public support for this. Hope they are failing.

[porphyrian]

16. The crickets get quiet when they are near. - n/t

[mopinko]

22. how is your credit?

do you have a good down payment? it is the people who are have problems qualifying for ordinary terms who end up with these lenders.