Sometimes refinancing your home mortgage can cause more problems than good. Interest rates right now for a 30-year fixed mortgage is near 3.6%. That is much lower than the rate locked in for people who bought their homes five or ten years ago. If some homeowners are struggling to keep up with their mortgages, the current rates can very appealing.”When people are desperate, when they are trying to make their budgets work, trying to make these things work. Folks take advantage of that emotion, and people need to take a step back and think about it,” said Mike Odneal of the Better Business Bureau.The state Attorney General’s office does not track mortgage re-financing in terms of numbers, but it does give ten warning signs so you do not fall victim to paying too much. They include: * Door-to-Door Solicitation. Be extra cautious when someone comes to your door trying to talk you into borrowing money. * Home improvement contractor arranges financing. A loan offered by a contractor to help you pay for repairs should be examined closely. You could end up with your home and your credit in disrepair. * Monthly loan payments are too high for your income. Before you sign anything, make sure you know what the amount of the monthly loan payments will be. If you don’t have enough income to make the monthly payments on the loan, you could be putting yourself at risk of foreclosure. * Excessive interest rates, high broker’s fees and other high settlement costs. If you have to pay thousands of dollars in points, broker’s fees, and other charges and costs, the loan may not be in your best interest. * Balloon payment. In a balloon loan, even if you make all monthly payments for several years, you will have to pay nearly the entire amount of the loan at the end of the term in one huge lump-sum “balloon payment”. If you are unable to pay this balloon payment, you will lose your home, even if you have made all your payments until that time. * Offers of debt consolidation. Some mortgage companies try to get you to refinance by offering to fold, or “consolidate,” all your debts into one mortgage. You will not lose your home due to a failure to pay hospital bills, utility bills, or credit card bills. But if those bills are “consolidated” into a mortgage loan, your failure to pay can result in a foreclosure and loss of your home. * Lender insists on refinancing lower interest loans. Most predatory lenders will insist on refinancing any lower interest loans or liens on your property into one large high-cost mortgage. This will greatly increase the amount of your mortgage debt and unnecessarily put you at risk of losing your home. * False information on loan application. When you fill out or sign the loan application, make sure you know what is included. If the broker makes your income appear higher than it actually is, you will probably not be able to afford the loan. * Repeated offers to refinance. Repeated refinancing, or “loan flipping,” can greatly increase your mortgage debt. Each time you refinance, the lender charges you more fees and costs. You may be charged a hidden penalty on the old loan each time you take out a new loan. * Misrepresentations. Make sure that what you are told about the terms of the loan is the same as what is written in the papers you sign. Be aware that the lender, broker, contractor, and attorney often work together to rip you off.
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