Predatory Lender Red Flags: Deception, Accounts, Debt Cycle

predatory lender red flags debt

In parts one and two of this multi-part blog series, we’ve gone over a number of signs that you might be dealing with a deceptive or predatory mortgage lender. While most in this industry are straightforward and reputable, there are also unscrupulous individuals or companies who try to take advantage of mortgage borrowers, especially first-timers who have not been in the market before.

At Altius Mortgage and our partners at Mortgage Ogden, we’re here to ensure this never happens to you. On top of offering numerous mortgage loans and services, including those tailored to first-time homebuyers, we also provide assistance with a wide range of tips and areas of expertise – including how to avoid scammers and other dishonest folks in this industry, especially as you’re shopping around to find the ideal lender. Today’s final entry into our series will go over a few other signs to watch out for.

Deceptive Presentation

We’ve touched on this area already in terms of lenders who will show you a monthly interest rate while trying to make it seem like a yearly one; sadly, deceptive presentation is a common tactic among predatory lenders. There are several ways this might happen, from graphs that are drawn with misleading data bars to information you’re sent in paper form that doesn’t quite match what the lender told you during your conversation.

If you’re unsure about any piece of data or paperwork, you should ask. If the answer you’re getting from the lender only confuses you further, or does not actually present you a solution, this could be a red flag that you’re being duped.

Bank Account Access

There are basically no situations where a lender should need access to your bank account for direct withdrawals. One who asks for this, or for a backdated check, is often preparing to pull money out of your account that’s not even related to the mortgage. Ensure you protect yourself from this harmful tactic by only working with reputable lenders who have a history in your area.

Debt Cycle

Finally, one of the toughest tactics to spot from predatory lenders, but also one of the most common, is the way they manipulate loan terms. A “predatory” loan is really designed to keep the borrower in a debt cycle, one where their interest rate is so high that they’re only ever paying down interest – their principal balance stays the same for years at a time while interest just keeps building up. These lenders will target people who don’t have the financial means to recover from this sort of thing.

However, you can avoid this tactic by simply being diligent. Read every bit of paperwork carefully, and work with independent financial advisors to confirm you’re not putting yourself in a bad position.

For more on common signs of a predatory lender, or to learn about any of our mortgage rates or mortgage loan services, speak to the staff at Altius Mortgage today.

Predatory Lender Red Flags: Paperwork, APR, Misrepresentation

predatory lender red flags APR

In part one of this multi-part blog series, we went over some basic signs that you might be dealing with a fraudulent or predatory mortgage lender. While most lenders in the field are experienced and reputable, there are sadly some who attempt to scam or otherwise take advantage of borrowers entering the market, especially first-timers.

At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to offer a wide range of home loan services, including mortgages ideal for first-time homebuyers and many other services. We’ve also helped steer clients away from scammers in our industry, generally by providing them with some of the telltale signs that indicate you might not be dealing with an honest lender. Here are a few other such red flags to keep an eye out for as you’re evaluating which lender to work with for your mortgage needs.

Paperwork Issues

There’s lots of paperwork involved in any mortgage loan situation, and this is one area where predatory lenders will try to fool you. One common tactic here is leaving several blank fields within a contract – the goal here is for the shady lender to go through and add details later, once you’ve already signed the contract, in an attempt to make these changes legally binding.

If you’re filling out a loan application by hand, be sure all blank spaces are filled with a proper value – or if there is no such applicable value, enter “N/A” in that space (do not use a single 0, which can be manipulated). For computerized filings, there should be an auto-filling format. If this is not possible, this could be an immediate red flag with your lender, as it should be a simple process.

Monthly vs APR

Another frequent tactic scammers will use is changing the way they represent the loan terms. Many will try to show you the monthly interest rate for a mortgage as if it’s the yearly rate, for instance, but you should be diligent here: Always ask for the APR, or annual percentage rate, which covers your full payment requirements including fees and other costs. Be sure you can afford the full yearly amount before entering into any agreement.

Misrepresenting Information

In some cases, a lender may tell you to intentionally misrepresent your information on a loan application. They may tell you to write down more income than you actually receive, for instance, or to report your income as full-time rather than part-time. Simply put, this behavior is illegal and represents fraud; any lender trying to talk you into it is committing the same crime, and you should never work with them.

For more on how to spot the signs of a predatory lender, or to learn about any of our mortgage rates or home loan services, speak to the staff at Altius Mortgage today.

Predatory Lender Red Flags: Credit and Rushing

predatory lender red flags credit

There are unfortunately several areas of modern life and economics where we have to be on the lookout for scams and dishonest people, and the mortgage world is one example. While many mortgage lenders are reputable, legitimate professionals looking to help buyers obtain the funds they need to purchase a home, there are also some who are only looking to make a quick buck, and do so using various dishonest, predatory or outright fraudulent methods.

At Altius Mortgage and our partners at Mortgage Ogden, we’re reputable mortgage lenders with years of experience in the industry and hundreds of satisfied clients to back up our quality, customer-first services. We offer numerous areas of assistance for clients, from mortgage loans for first-time homebuyers to help with refinancing, tips on mortgage rates and numerous other distinct areas. We welcome comparisons of our services to other lenders as you shop around, both because we want the best for all our clients and because we’re confident we’re the ones to provide it – but we’re also here to advise you of some of the signs that another lender you’re considering is not reputable, and in fact may be predatory or fraudulent and should be avoided. This multi-part blog series will dig into all the red flags to keep an eye on here.

Goals of Legitimate Lenders

Firstly, a positive word on what a mortgage lender experience should be like. A legitimate mortgage lender is here to help you make safe, intelligent decisions with your finances as you make one of the largest purchases in your life. They help you take out a loan that you will be able to make payments on comfortably for many years into the future, ensuring your overall finances will remain intact even as you take on this new expense.

Predatory lenders, on the other hand, are just here to make quick cash. They will write loans that are far too costly to borrowers, trapping them in a cycle where they only pay interest and cannot reduce their principal, or other related themes.

What are some of the early signs you might be dealing with such a lender?

Lack of Credit Check

If the lender attempts to move you forward without a check on your credit, this is a huge and immediate red flag. Some loans are designed for people with low or no credit, sure, but the lender still has to check to confirm your status here – and any who doesn’t is trying to pull a fast one.

General Rushing

One of the key practices of predatory or fraudulent mortgage lenders is attempting to confuse you, and a common tactic they use here is rushing. You’ll be rushed to sign paperwork, or told that reading the fine print really isn’t important and you should just trust the lender’s word. This is a frequent sign that there are clauses or parts of the contract the lender does not want you reading.

For more on signs that you might be working with a predatory lender, or to learn about any of our mortgage rates or home loan services, speak to the staff at Altius Mortgage today.

No-Appraisal Mortgage Loans: Benefits, Eligibility and More

no-appraisal mortgage loans eligibility

In part one of this two-part blog series, we went over some basics on a relatively rare and unique situation in homebuying, but one that does take place: The no-appraisal mortgage loan. This type, where the home is not appraised in a typical fashion ahead of sale, are not common on residential properties, but may still happen in certain situations.

At Altius Mortgage and our partners with Mortgage Ogden, we’re happy to offer a wide range of home loan options, from numerous programs for first-time homebuyers to options for mortgage refinancing and several other areas. What might be some of the benefits of considering a no-appraisal loan in unique circumstances, how can you figure out if you’re eligible for this to begin with, and which other factors should you be considering before moving forward? Here are some basics.

Benefits of No-Appraisal Loans

For those who are eligible and fit the criteria, the primary benefit of a no-appraisal loan is cost savings. Homebuyers are generally the ones who are responsible for the costs of an appraisal, which tends to cost several hundred dollars at minimum – when no appraisal is necessary, this is a cost that’s avoided.

In addition, no appraisal often allows mortgage situations to close faster. There’s no more need to schedule and appraiser, work around their schedule, plus wait multiple days for their report. In fact, one of the most common instances where this no-appraisal format is considered is when a quick closing date is required by both parties within the mortgage situation.

Eligibility for Appraisal Waivers

Fannie Mae has created rules and guidelines that state who is and is not eligible for an appraisal waiver or other forms of no-appraisal loan. Here are their regulations:

  • You must be a strong borrower with an excellent credit score
  • You must be able to prove your available assets
  • The dwelling must meet certain qualifications
  • You must meet certain LTV ratios based on the type of property
  • There may be disqualifications for certain property types, including multi-family units or those in disaster-impacted areas
  • Appraisal waiver can be denied anytime the lender has a reasonable belief an appraisal is necessary

Prior Considerations

Before going down this path, it’s vital you understand exactly what the ramifications might be. It’s possible your home’s actual value will be significantly lower than the purchase price you’re paying – this is a risk you take, and you cannot hold the lender or the seller liable for an incorrect valuation later on. Ensure you know your rights and have discussed this with your lender and realtor before proceeding.

For more on no-appraisal loans, or to learn about any of our mortgage rates or other mortgage services, speak to the staff at Altius Mortgage today.

No-Appraisal Mortgage Loans: Basics and Alternatives

no-appraisal mortgage loans

For the vast majority of mortgage and homebuying situations, a home appraisal is an important part of the process. This involves a third party appraiser examining the property inside and out to provide a professional estimate of its market value, helping confirm to both buyers and sellers (and even lenders) that the price being agreed upon is realistic plus multiple other areas.

At Altius Mortgage, we’re happy to assist all our clients with the appraisal process if needed, including first-time homebuyers, for whom we offer great mortgage rates and programs while also providing expertise and guidance through this process. We’re also available to work with borrowers for a more unique pursuit: A no-appraisal loan, which is much rarer than the normal appraisal process but will still be used in some cases. This two-part blog will go over the details of this program and why it’s sometimes used, plus the kinds of borrowers who might be good candidates for it.

No-Appraisal Loan Basics

As the title suggests, a no-appraisal loan is a home loan that requires no professional appraisal. There are a few methods by which this type of loan might be attained, the most common of which is known as an appraisal waiver – this gives the homebuyer the right to decline having a traditional appraisal done on their property.

As we’ll dig into a bit further later on, no-appraisal loans are not common at all for private residential properties, largely because they present a great risk to both the parties involved and the lender. If there is no objective evaluation of the property, it could come in far more or less valuable than the mortgage amount – leaving borrowers at risk of default on one side of the coin, or sellers stuck with far less than their asking price on the other. However, as of 2017, both Fannie Mae and Freddie Mac have begun offering some select appraisal waivers.

Appraisal Alternatives

The most common alternative used during a no-appraisal loan is a computer calculation program that plays something of a similar role, though with less specific involvement. This program will utilize information like previous home value and other properties in the area to place a value on the home – but as you may have guessed, this alternative is less precise than an actual in-person appraisal.

In other cases, no appraisal will be required at all.

Refinances

A no-appraisal refinance loan is also possible using this same method, and this is an area that isn’t quite so restrictive. Especially in cases where you’re using the same lender for both your original loan and your refinanced loan, there are often relaxed standards allowing no-appraisal refinances – programs like the VA loan, the FHA loan and the USDA loan all have systems in place to make refinancing easier from an appraisal standpoint.

For more on no-appraisal home loans, or to learn about any of our mortgage loan services, speak to the staff at Altius Mortgage today.

Recent VA Loan Changes: Eligibility and Fee Alterations

VA loan changes eligibility

In part one of this two-part blog, we went over some of the basics on recent changes to the VA loan program that makes it both more accessible and more beneficial for those who qualify. Backed by the US Department of Veteran’s Affairs and bringing benefits like no down payments and fantastic mortgage rates, VA loans are meant for military service members, veterans and their families to repay them for their service to our country.

At Altius Mortgage and our partners at Mortgage Ogden, our wide range of loan programs includes robust VA loans and mortgage rates for any of our clients who qualify here. Based on the 2019 Blue Water Navy Vietnam Veteran’s Act, which went into effect in 2020, many of our military veterans and spouses have seen significant positive changes to their ability to borrow and the amounts they can obtain. Here are some further details on how this has happened.

Changing Eligibility

In addition to eliminating the conforming loan limit in many areas for veterans, as we went over in part one, the act above also increases access to VA loans for two groups of veterans: Those who have been awarded a Purple Heart and any Native American service member. For the former group, funding fees will be waived entirely for those who close on their home while on active duty; for the latter group, the $30,000 cap on loans for building or purchasing a home on federal trust land has been lifted.

This simply makes it easier for those in this position to obtain loan funds easily, which was the primary goal of this section of the act.

Fees for Funding

Speaking of funding fees, there have been some small changes made here as well. Specifically, veterans and active service members will pay a slightly increased funding fee of 0.30 percent, up from 0.15 percent. However, National Guard and Guard Reserve members will now see their fees decreased to match this same 0.30 percent figure that active service members pay. This change is meant to be temporary.

Now, several groups of veterans were already exempt from funding fees, including those with service-related disabilities and surviving spouses. In these cases, this exemption remains.

Application Process Stays Unchanged

One area that saw very little change due to the act we discussed above is the application process for VA loans, which remains identical. Veterans who wish to use their VA benefits to purchase a home must still obtain a Certificate of Eligibility, plus potentially additional documents that your loan officer will be happy to detail for you.

For more on recent changes to the VA loan program and how they might impact you, or to learn about any of our mortgage rates or home loan services, speak to the staff at Altius Mortgage today.

Recent VA Loan Changes: Basics and Loan Limits

VA loan changes limits

While we’re proud of all of our mortgage loan programs offered at Altius Mortgage and our partners at Mortgage Ogden, perhaps the area that gives us the most pride is our VA loan services for military veterans, service members and select spouses. Backed by the US Department of Veteran’s Affairs, VA loan programs contain several benefits for those who qualify, from no down payment requirements to great mortgage rates.

One of the most common questions we’re asked about this program by those who are looking to apply: If I qualify, what are the limits to what I can borrow under a VA loan? And as it turns out, some major developments here within the last two years have actually made this area less restrictive for those who qualify, allowing them a wider range of loans covered by the VA than previously. This two-part blog will go into all the recent changes you should be aware of, plus the basics to understand on loan limits if you’re a veteran or military member applying for a VA loan.

2019 Blue Water Navy Vietnam Veteran’s Act

A very important event to be aware of down these lines was the passage of what’s known as the Blue Water Navy Vietnam Veteran’s Act in June of 2019. While the primary purposes of this act were to change certain benefits for Vietnam veterans who were exposed to certain herbicides or chemicals, the act also contained vital language covering anyone eligible for the VA loan program.

The changes, which we’ll go over further in our upcoming sections, were in several areas. They touched on everything from loan limits to eligibility changes for veterans, generally expanding the range of individuals who qualify while also expanding the maximum borrowing amounts for many. Let’s dig into how they did this.

Loan Limits Vs. Cost Limits

It’s important as we move forward here to understand that loan limits and cost limits are not the same thing in a mortgage situation. Loan limits only apply to the amount the VA will actually approve for a loan; cost limits do not apply to any loan, including VA loans.

One more important piece here: Any person who is eligible for a VA loan but also has other VA guaranteed loans already active may fall under different restrictions. Our subsequent sections will go into the specific changes the 2019 Blue Water Act helped usher in for VA loans.

Conforming Vs. Jumbo Loans

In previous situations, veterans or military members who lived in higher-value areas faced some challenges due to county-specific conforming loan limits. However, the 2019 act we discussed above – which went into effect in 2020 – provides relief for this restriction. Now, veterans can obtain no-down payment VA-backed loans no matter where the home is and no matter whether the home exceeds conforming loan limits in the area.

For more on the recent changes that improved borrowing power for veterans and military members under the VA loan program, or to learn about any of our mortgage loan services, speak to the staff at Altius Mortgage today.

Mortgages and Retirement: Reasons to Maintain

mortgages retirement reasons maintain

In part one of this two-part blog series, we went over some of the reasons why some of those who are approaching retirement age often try to increase their mortgage repayment schedule to pay the entire home loan off before retiring. When this is financially possible, it’s a move that can not only reduce stress and make retirement budgeting easier, but also one that can reduce the total amount of interest you pay through the life of the mortgage.

At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to provide a number of mortgage resources for those in this age range, including reverse mortgages for those over age 62. While some who are able will try to pay down their existing mortgage before retiring, this isn’t always possible – and even if it is, it might not always be the most practical move given your situation. Here are some basic circumstances where you might not choose to prioritize this effort, plus how our loan officers will help.

Simple Affordability

In some cases, those who are not flush with extra income simply won’t be able to afford accelerating their mortgage repayment schedule ahead of retirement. There are several other major areas that must be budgeted for during this same period, and you might not have room in yours for making these extra payments.

And if this is the case, that’s totally okay! You are not necessarily putting yourself in any kind of bad position by continuing to pay your mortgage during retirement, so long as you’ve included this area in your future budgeting. It’s much better to be realistic about this than to strain your finances in a misplaced attempt to pay the mortgage down earlier than you realistically can.

Saving for Future

Down related lines, putting all your current funds into paying down the mortgage may significantly hamstring your ability to contribute to long-term savings. Locking all your money into home equity leaves very little left over, and is only good for taking out a home equity loan or selling your home – neither of which are common events during retirement.

Loan Officer Assistance

Are you on the fence here, unsure whether to divert more funds toward your mortgage payoff or simply continue making the same payments ahead of retirement? You’re not alone – this is a conversation many in this age range tend to have, both with their spouses and/or their loan officers. Our loan officers are happy to assist you with all the basic variables involved here, helping you evaluate your finances and remaining loan balance to determine the best course of action.

For more on how to handle your mortgage as you approach retirement, or to learn about any of our mortgage rates or home loan solutions, speak to the staff at Altius Mortgage today.

Mortgages and Retirement: Reasons to Pay it Down

mortgages retirement pay down

For those who are approaching retirement age and considering ideal timing and budgeting themes here, an active mortgage is one of the key areas that will be considered. As one of your largest individual expenses, remaining years and amounts on a mortgage may play a major role in determining when you can retire – and some in this position will make extra efforts to pay off their mortgage before retirement.

At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to provide not only a wide variety of mortgage options, including reverse mortgages for those over age 62, but also tips and expertise for those who have an existing mortgage and are looking for advice on how to proceed with it leading up to retirement. While some make it a major priority to pay the mortgage off ahead of retirement, others don’t feel quite the same rush – and both groups are often justified here. This two-part blog will go over some reasons why many make this effort, but then also why others don’t and why it’s okay to be on either side of this coin depending on your specific situation.

The Stress of Debt

Owing money can be a stressful thing, especially for larger sums like an outstanding mortgage. Those who are constantly worried about their debts may see these struggles transfer over to other areas of their life, such as their sleep quality or general anxiety levels.

For those who are able from a reasonable financial standpoint, paying down the mortgage at a slightly accelerated rate before retirement is a great way to limit this stress entering what’s supposed to be a rewarding period of life. Be sure not to go too crazy here and risk your retirement funds or other parts of your budget; that said, there are many simple ways to increase your payments and move a bit quicker through the final few months or years of your mortgage so you own the home outright by the time you retire.

Budgeting Themes

In addition, retirement comes with some significant budgeting needs. You won’t be working or receiving the same kind of steady income, meaning you must budget well. Without an expensive mortgage taking up a significant portion of your funds each month, it will be much easier to budget other retirement areas.

Interest Savings

Maybe the biggest reason some homeowners look to fully pay down the mortgage before retirement: Paying less overall interest. You might be able to save thousands or even tens of thousands of dollars in future interest payments by accelerating your mortgage payments. Be sure to check about early payment fees, which are present for some lenders in certain cases.

For more on how to consider your mortgage when approaching retirement, or to learn about any of our mortgage rates or other home loan services, speak to the staff at Altius Mortgage today.

Making the Transition From Renting to Homeownership, Part 2

making transition renting homeownership

In part one of this two-part blog series, we went over some of the basics on making the all-important transition from renting into homeownership. Owning a home holds several major benefits over renting, both financial and otherwise, but many potential buyers struggle with understanding when they’re in the right financial shape to consider this leap.

At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to offer a variety of mortgage loans for first-time homebuyers, from FHA and VA mortgage programs to certain low-down payment conventional loans available to those who qualify. While much of part one went over the benefits of homeownership and finding the ideal time to make the transition from renting, today’s part two will dig into some of the specific steps we recommend following once you’ve decided to go down this road.

Do Your Research

The first major area to lean into is research, both on your own financial situation and the broader market out there. This is a field that can be complex to those who have not dealt with it before, and given the amounts of money that are at play and the long-term impact of the decisions you’ll be making, it pays to know what you’re getting into.

For some, various homebuyer education courses – offered both online and in other settings – might be ideal, helping them grasp basic terms and pieces of the mortgage application and home search process. For others, leaning on trustworthy sources like friends or family who work in real estate or the mortgage industry may be beneficial, though you should be quite sure this is someone you trust – and not someone who is going to try and lock you into working with them, which shouldn’t be decided until later in the process.

Credit, Debt and Income

Another major area to focus on for the homebuying transition is your overall finances, which can generally be split into credit history, current debts and your income. Ensure your credit score is at a high enough figure and is also accurate, plus that you are not paying exorbitant amounts of debt that will raise your debt-to-income (DTI) ratio above where many lenders will feel comfortable lending money to you. In addition, look at your savings and expected future income to determine your capacity to make a robust down payment, plus to understand the general range of home prices you’ll be looking for.

Specific Budgeting Themes

Some of the specific areas you’ll need to be budgeting for as part of a homebuying process:

  • Down payment
  • Closing costs, earnest money or mortgage “points”
  • Moving and relocation costs
  • Utility deposits
  • Insurance and property taxes
  • Emergency expense savings

For more on making the transition from renting to owning a home, or to learn about any of our mortgage rates or other mortgage solutions, speak to the staff at Altius Mortgage today.