Introduction

With the dramatic increase in prices of property in the UK, many people are looking overseas to purchase a home. The problem is, it can turn sour once they get into the intricacies of dealing with overseas Solicitors, Banks and Developers. One area that has become more flexible, however, is arranging a mortgage overseas. This article discusses the ways you can take out a mortgage abroad, points out the disadvantages and tells you what the differences are between a foreign mortgage and a UK based one. It also talks several times about the overseas buy-to-let market.

European and US Mortgages in Summary

You can get a reasonably competitive mortgage in the US and most of the established European overseas property markets like Portugal, Spain, France, Switzerland and Italy. The rule of thumb is, the more established the market, then the easier it is, so in emerging markets like Greece, Bulgaria, Poland, The Caribbean and Israel, you can get a mortgage - but the rates will be considerably higher (see below), the amount they will lend is less and they also have stricter borrowing terms.

There are not too many fundamental differences between a foreign mortgage and a UK based one, but bear in mind that the risks of buying a property are the same as in the UK. In Europe it is not the norm to see Mortgages offered interest only and it is very rare to see buy-to-let mortgages. They will usually base the amount you can borrow on how much you earn rather than the rental income and also there is not really a market for self-certification mortgages. A much wider range of secured loans is available in the US.

Pros and Cons of Foreign Mortgages

In the established property markets like France, Spain and to a lesser extent Portugal the lenders have become much more flexible when dealing with UK buyers. Although things can often change quite dramatically over the period of a mortgage, it is worthwhile noting that Interests rates on the European Continent are typically lower than in the UK. The problem is that the low interest rates are starting to attract a lot of buy-to-let investors, who are finding that the UK market has begun to mature.

If you do plan to let the property out the income can be offset against the loan for tax purposes. Check out the tax rules in the country you are proposing to buy in, but some have very expensive wealth charges payable on equity. Borrowing the money to make the purchase rather than buying outright could mean you avoid this tax.

One of the disadvantages of taking out a foreign mortgage is that, as it is in another currency, it adds another layer of risk. If, for example, the Euro goes up - it will cost you more to buy the currency using your sterling. You can however minimise this risk by using services provided by currency specialists and banks to fix the exchange rate for a set period and manage monthly transfers.

How to arrange a Foreign Mortgage

In each country the local lenders are increasingly catering for UK buyers and some UK based banks will also offer mortgages on overseas property. For example, The Halifax will provide mortgages on properties in Spain and Barclays will lend on properties in most of the mature European countries like France and Spain and Italy.

You can use a UK based mortgage broker to research overseas mortgages. Conti specialises in overseas property purchase, while other brokers, like Savills, advise on mortgages in different markets. Barclays Bank noticing a growth in the market also launched an on-line service that gives tips for people looking to buy abroad.

Although you might prefer to deal with someone UK based you can also use an overseas broker to arrange a mortgage. Otherwise you can go directly to a lender. This is probably easiest if you are using a UK bank but bear in mind that some overseas lenders have a UK presence. Credit Foncier of France recently opened a London branch to target people looking to buy French properties and Piraeus from Greece has also launched a service for British based buyers.

There is the obviously the language advantage of dealing with a UK lender and you might be tempted to go for one with a familiar name. If our looking for an interest only mortgage you will probably need to go for a UK based bank, or at the very least one with strong UK ties.

Most brokers recommend looking at local lenders as many offer the cheapest deals and offer the widest range of fixed and variable rates. Also lenders in the popular European property markets will nearly always employ an English speaking team - so language shouldn't really be a barrier.

You will almost certainly have to check out the rules in the country you are going to buy, but a local lender could be bet if you are going for a specialist scheme like a France based sale and leaseback.

Final Summary

As mentioned before the rates can be lower than in the UK, for example in France, Spain, Italy and Portugal the rates can start as low as 3.5%. In the less established markets like Bulgaria and other eastern European countries the rates can start at around 6%, whereas countries like Greece and Cyprus roughly fall half way between the two at 5%. The borrowing criteria are typically tougher than in the UK and you should expect to be able to borrow only around 70-80% of the property's value.

The documentation you need is proof of income and you usually have to prove you can meet mortgage repayments through your own earning rather than rental income

Residential lending has seen many changes over the last ten years since the end of the recession and most of the significant ones have taken place in recent times. The residential market is still very strong with good demand and not enough good quality properties in the right areas. Inflation has remained for the most part within Government guide lines and with low interest rates there are in some areas not enough properties to satisfy demand. The demand for new properties is very strong for owner occupiers and investors in the BUY TO LET market.

The poor performance of pension funds has driven a large section of investors to consider bricks and mortar as a safe haven for their money with a low risk. Lenders have seen the changes in our life style and most lenders including the high street lenders who have in the past been a little conservative are now offering BTL mortgages. Because of the strong demand lenders have now become far more positive about lending and providing the clients obtain a good credit score income multiples have been stretched and where a good deposit is available some lenders will consider affordability rather than x times income. This is a revelation in lending particularly when the normally conservative lenders have taken to this like a duck to water and offer Financial Advisers the opportunity to use their online calculators to work out what the client can afford.

Having a good credit score is current buzz word and gives lenders that comfort zone that if a potential client has managed their financial affairs in a satisfactory manner they are worthy of a smile and extra borrowing potential. It was almost unheard of for high street lenders not to check income but now with the right loan to value and credit score lenders are offering Express Underwriting. One lender has been pushing the boundaries with lending up to 125 % of the valuation and shows no sign of changing the guide lines. Again confidence in the property market has allowed lenders to be more generous with their underwriting. Another change has been the need to always survey the property, again providing we have enough equity in the property lenders will rely on information held on record which would suggest that a property in a given area of a certain size and construction would value at the claimed value.

This facility is normally used for re mortgages but watch this space, one of the new lenders to launch recently is already promising an instant offer. Lenders are now looking to provide innovative schemes to help new borrowers to get on the housing ladder assisted by some help from the government, who realize that a strong housing market is good for the Country and our economic growth. Lenders have also been far more understanding about clients with a Bad Credit history. There are a number of specialist lenders who have schemes designed for those who have had a blip in the past and clients should seek the services of an Independent Financial Advisor who has access to the whole of the market and can advise the client what is the right scheme for them. Most IFAs will run an agreement in principal across the market with a specialist packager to ensure that they have a recognised audit trail to confirm that the correct advise has been given. It will not be long before all the high street lenders offer similar schemes.

If you are shopping for a new mortgage or refinancing your existing mortgage you may be concerned with finding cheap mortgages. What are cheap mortgages? It depends on your financial needs for the home loan. You may need a mortgage with the lowest monthly payment amount possible. Cheap mortgages could also mean qualifying for the lowest possible interest rate to pay the lowest amount of finance charges possible. Whatever your financial goals for cheap mortgages might be, here are several tips to help you qualify for the best possible home loan.

Cheap Mortgages – Find the Lowest Payment

If you are a homeowner in need of the lowest monthly payment amount possible, there are two ways to achieve this, regardless of your credit. If you are able to qualify for a lower interest rate than you already have with your existing home loan, your monthly payment will go down. If your credit prevents you from qualifying for a lower interest rate you can still lower your monthly payment by extending the term length of the new home loan. Term length is the amount of time your mortgage lender gives you to repay your home loan. Common term lengths are 15 or 30 years; however, there are now mortgages with terms as long as 40 to 50 years. By choosing a term length of this duration you will have the lowest monthly payment possible, regardless of your credit rating.

Cheap Mortgages – Comparison Shop for the Best Loan

Comparison shopping will save you thousands of dollars and help you find cheap mortgages online. The Internet is a fantastic tool for quickly locating mortgage offers from dozens of lenders. Some homeowners get hung up on interest rates when comparison shopping for cheap mortgages. If you concentrate solely on the interest rate you will overlook dozens of other fees and your cheap mortgages quickly become overpriced home loans. Comparison shopping for cheap mortgages from a variety of lenders will save you money only if you compare all aspects of the mortgage loans and compare correctly. When comparing cheap mortgages you need to compare apples to apples to insure you choose the best loan offer. You can learn more about comparison shopping cheap mortgages to find the best home loan for your financial situation by registering for a free home loan guidebook.

Our parents and grandparents taught us to find a good job, buy a house, and then pay it off as soon as possible. That sounds great except that things aren't the same today as they were for our parents and grandparents. Today we change jobs more often, move more often and refinance every 3-4 years. Yet, given these statistics, most Americans still choose a 30-year fixed mortgage to finance their homes and many put off saving for retirement until their mortgage is paid off. These are two big mistakes that Americans make in managing their money-mistakes that are literally costing households millions of dollars each year. Your home can be an even better investment if you learn to optimize this asset. First, you will need to realize the following:

Equity Is Not Liquid-

Ironically, equity in our homes feels like cash until we need it. But, when you need it most you may not be able to qualify to get it.

Equity Does Not Earn A Rate Of Return-

Our homes will appreciate, based on the supply and demand found in the market, regardless of whether the home is financed or owned free and clear. However, equity it self earns no rate of return.

You Lose Safety With Each Principal Payment-

As you pay down your mortgage, you increasingly have more equity to lose while the lender is in an increasingly safer position.

The Tax Deduction Is Reduced As The Mortgage Is Paid Down-

With each principal payment, you are reducing the mortgage interest tax deduction the government affords us. For most of us, mortgage interest is our largest deduction.

Equity Is Not The Same As Cash In The Bank-

Cash in the bank is the same as cash in the bank.

Banks Get Rich By Borrowing Money At A Lower Interest Rate Than They Lend-

Would you like the opportunity to think like a bank? I can show you how to achieve wealth by managing your equity. Email me for free literature on how to do just that

In September, foreclosure rates were up 46% in Washington over last year at this time. As more people are faced with this difficult situation, I guess it is inevitable that more and more con artists will emerge to try to take advantage of those in this vulnerable position.

This article will look at some of the most common scams encountered by homeowners who are faced with foreclosure, and will provide some simple rules to follow that will allow you to outwit the con artists, and save your home.

THREE COMMON FORECLOSURE SCAMS: (and Simple Rules to Defeat Them)

Scam #1. The Foreclosure “Consultant” Scam

In this scam, someone tells you that you should sign over your deed (commonly known as a “quit-claim” deed) to them, to be held in escrow. Then they will have you take out short term loans, and have the proceeds wired to their own accounts.

To make matters worse, the foreclosure “consultant” will promise to renegotiate the homeowners debt, and/or prevent the foreclosure. These “consultants” have the homeowner pay them some combination of an up-front fee, a monthly fee, and/or “rent.” The promised foreclosure relief and debt renegotiation never takes place.

Rule #1: Do Not Sign Over The Deed To Your Home: All the variations of this scam begin with asking the homeowner to sign over their deed. If you do this, you haven’t just lost your house, you’ve given it away. Or even worse, paid someone to take it from you!

Scam #2. The “Bankruptcy/Foreclosure” Scam According to the U.S. Department of Justice, this is the most common foreclosure scam on the West Coast. The con artist says they can save the homeowners house for a fee of several hundred to a few thousand dollars a month. They have their “clients” sign the bankruptcy forms and tell them they will be working on their behalf, often stating that they will pay the mortgage payments out of their fee. The “client” doesn’t question the actions of the consultant, because, for a time, the foreclosure is automatically postponed by the initiation of bankruptcy proceedings, and the homeowners stop receiving collection calls and letters.

There are two variations on this scam. In the first, a new bankruptcy is partially filed for the homeowners. This automatically stops the foreclosure action. Unfortunately, the bankruptcy process falls through, as no one actually appears in court, and the house is foreclosed on. The second variation simply takes a partial interest in the home (remember: Don’t sign over your deed), and transfers that interest to an individual or business already involved in a bankruptcy. The partial interest may be transferred several times, up to a record 24 times in one case!

Rule #2: When Filing Bankruptcy, Work With a Reputable Attorney: Don’t try to save a few dollars by avoiding attorney’s fees. If you are going to file bankruptcy, it’s because you have something you don’t want to lose. It’s definitely worthwhile to pay a bankruptcy attorney to represent you.

Scam #3. The “Remodel” Scam This scam works by having a “contractor” contact the homeowners, offering to remodel their home. After the remodel, so the story goes, the home will be able to sell for more money, which will be split between the “contractor” and the homeowner. The trap is set when the homeowner is required to sign over the house. Alternatively, the homeowner may be told that they need to immediately move their belongings out of the house so they can start construction.

Instead, the home is immediately rented out for cash, the mortgage payments remain unpaid, and the “contractor” often files bankruptcy so that he, not you, can hold onto the property a little longer.

Rule #3: Don’t Move Out: When you move out of your home, you lose a lot of your options, as well as incurring rental expenses for your temporary residence.

Facing foreclosure can be a very difficult time for all homeowners. Falling behind on mortgage payments can occur for a number of unfortunate but legitimate reasons. It may seem like the entire world is out to get you.

But there is good news, if you are a few months behind on your mortgage payments. There are mortgage experts who can help you, and there are loan products designed specifically to keep you from losing your house. Most lenders can get you a temporary or “quick-fix” loan, but you need to make sure that you have a sound exit strategy in place or you may find yourself in worse shape than you are right now.

Yield Spread Premium sounds scary, but it’s just a fancy name for what your loan originator overcharges you to collect a bonus from the wholesale lender. Yield Spread Premium or YSP, is easy to spot when you know what to look for. Here are the basics to help you recognize YSP and avoid lining your loan representative’s pockets at your expense.

The first step to avoid overpaying for your new mortgage interest rate is to check out the going rates across the market. For every .25% the loan originator overcharges you, that person’s bonus or YSP is 1% of your loan amount. If your actual interest rate is 5.5% at the time your guarantee is written but the person you are dealing with tells you they can guarantee 6%, you know they are overcharging you .5% in Yield Spread Premium.

How can you tell what the going rates are across the mortgage market? Every Friday Fannie Mae publishes the yield for their mortgage backed securities on their website. This information can be found under “Fannie Mae Weekly Yield” and you can use this gauge the going rate across the market. Knowing this information is much like knowing the bluebook value of a car you are purchasing. It is much more difficult for the dealer to overcharge you when you know the wholesale value of the car.

You can learn more about refinancing your mortgage without paying too much by registering for a free mortgage guidebook.

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

An Option ARM mortgage loan is a "Negative Amortization Mortgage," which means that if the borrower only pays the minimum payment each month the principal will build. By definition, a negative amortization mortgage is one, which has a low monthly payment that does not fully cover the accrued interest each month. Since the interest is not being fully paid, the difference between what is paid and the interest accruing is added to the balance of the loan.

Option ARM loans can be dangerous if the borrower is not prepared to refinance in a few years or is unable to accept higher payments. Lenders and brokers have an obligation to educate their clients to help them minimize the chance of future problems. Borrowers, like many uninformed article writers, blame the Option ARM Loan when in fact they should blame the loan officer for not educating them.

Article writers tend to use examples of individuals using Option ARM Loans for the wrong reasons. Folks that max out all of their credit cards every few years and suck out all the equity in their home to clear the balances are a prime example of wrong usage. When the market softens, these folks are guaranteed to fail if they continue their poor spending practices (i.e. not living within their means) no matter what type of mortgage they have.

The fact that foreclosures are running 30% ahead of 2005 figures can be mostly attributed to these individuals, and those people that took on high loan-to-value (LTV) loans with high rates just to get into their home or investment property. Now they want to refinance into an Option ARM loan to get the payments manageable.

In California and Florida, property values have dropped more than the rest of the country; real estate equity is already running low. Owners that initially took 80% to 90% loans in the past few years are now sitting at a loan-to-value of 100% or higher based on current values. Consequently, they are unable to reduce their payments through refinancing and are stuck with a mortgage payment they cannot afford.

The big culprit in putting folks over their heads is not the loan programs, but the fact that borrowers can "state" their income to qualify. Although an Option ARM loan has a low payment over the initial few years, the borrower still must qualify as if they were going to pay the 30-year amortized payment. Because borrowers are allowed to "state" their income to the tune of often twice the income they actually make, they appear to be able to afford the amortized payment when in fact that amortized payment can be way more than they can comfortably afford. Also, if there is any ripple in their income stream due to injury or being laid off their job, they are in the red quickly.

In our society of instant gratification, most people put more energy and effort into keeping up with the Joneses than into planning their finances and preparing for retirement. The Joneses, however, might not be playing the right game.

Consumers spur growth of the American economy, but by doing so, they are deferring wealth creation. Even if people have pensions or contribute to a 401(k) or Individual Retirement Account (IRA), risk is deferred by not investing beyond them.

Deferring risk might be the most costly way to prepare for the future. By not expanding opportunities to create wealth, clients essentially are saying that their current strategies will provide enough assets for the future based on an expected return on investment. If that investment is in stocks or mutual funds, then clients hope that the stock market will have a certain return until they retire.

Many clients are too comfortable with their current investment strategy or afraid of learning about other investments. This complacency or inattention to an investment portfolio is akin to an ostrich burying its head in the sand. The lucky clients who have realized minimal or even break-even returns over the past five years in the stock market have still lost ground to those who have sought better returns through other investments such as real estate. Some may also have an “ostrich attitude” about health issues and the ability to work productively at a job that will pay enough.

People cruising along comfortably with their investments in 401(k)s and IRAs are deferring risk because they pin their hopes on investments that probably cannot fund their retirement. Most do not understand the full impact that inflation will have on their investments over time. They also do not realize the true cost of retirement. Unfortunately, most Americans’ retirements will be grossly under-funded.

People without enough money to live the retirement lifestyle they desire will be forced to work longer. The next time you see older looking greeters at the store, ask yourself whether they are working because they need the money or to stay busy. Their uniform may symbolize an unrealized retirement dream.

There is speculation about an impending stock market crash around 2016, when the first baby boomers reach age 70 ½ According to Robert T. Kiyosaki in Rich Dad’s Who Took My Money?, millions of people in 2016 will need to take out money from their retirement programs by law. This may result in more sellers than buyers. On the other hand, Kiyosaki asks whether the wealth being created by China’s expansion may find its way to our markets and help to avert a crash. In reality, what will happen is anybody’s guess.

There is risk in every choice — in action and inaction. The best way to manage risk is to be educated about investment choices and opportunities. Clients must take responsibility and study the issues. The books I recommend to clients help them understand investing principles as well as particular investments and their related strategies.

In addition to learning about various investments, clients need to understand that there are tax issues and other implications that could affect their returns. Many of these nuances, however, are clear only to financial professionals. Therefore, it is smart to partner with competent financial professionals to whom you can refer clients.

Teaming with a good accountant, financial planner and estate-planning attorney, you can offer a team of professionals who will help increase your clients’ ability to create wealth. Professionals can show them how to take advantage of tax strategies available to entities rather than individuals and how to protect assets and other luxuries — for example, by avoiding probate.

While these services can look expensive, the money saved or wealth created will make the services well worth the investment. The key is to help your clients understand that these are not costs but investments. Financial professionals will open new investment doors to them as their wealth builds. For example, people who have a net worth of $1 million are accredited investors as defined by the Securities and Exchange Commission’s Regulation D Rules 505 and 506.

Accredited investors have access to investments to which the public does not — an even greater opportunity for creating wealth. In essence, “it takes money to make money.”

If people take time to learn about investments available to them and strategies to minimize risk while maximizing possibilities for substantial investment returns, they are more likely to get the types of returns they expect. These strategies include deferring capital gains tax by doing a 1031 exchange with real estate investments, which gives the investor access to more money over a lifetime of investing. Mortgage interest is another good thing to defer if the payment savings are being invested and the appreciation rate on the property is outpacing the appreciation rate on the loan. Deferring interest and investing the savings are possibly the perfect application of the time-value of money.

If you are shopping for a new mortgage or refinancing your existing mortgage you may be concerned with finding cheap mortgages. What are cheap mortgages? It depends on your financial needs for the home loan. You may need a mortgage with the lowest monthly payment amount possible. Cheap mortgages could also mean qualifying for the lowest possible interest rate to pay the lowest amount of finance charges possible. Whatever your financial goals for cheap mortgages might be, here are several tips to help you qualify for the best possible home loan.

Cheap Mortgages – Find the Lowest Payment

If you are a homeowner in need of the lowest monthly payment amount possible, there are two ways to achieve this, regardless of your credit. If you are able to qualify for a lower interest rate than you already have with your existing home loan, your monthly payment will go down. If your credit prevents you from qualifying for a lower interest rate you can still lower your monthly payment by extending the term length of the new home loan. Term length is the amount of time your mortgage lender gives you to repay your home loan. Common term lengths are 15 or 30 years; however, there are now mortgages with terms as long as 40 to 50 years. By choosing a term length of this duration you will have the lowest monthly payment possible, regardless of your credit rating.

Cheap Mortgages – Comparison Shop for the Best Loan

Comparison shopping will save you thousands of dollars and help you find cheap mortgages online. The Internet is a fantastic tool for quickly locating mortgage offers from dozens of lenders. Some homeowners get hung up on interest rates when comparison shopping for cheap mortgages. If you concentrate solely on the interest rate you will overlook dozens of other fees and your cheap mortgages quickly become overpriced home loans. Comparison shopping for cheap mortgages from a variety of lenders will save you money only if you compare all aspects of the mortgage loans and compare correctly. When comparing cheap mortgages you need to compare apples to apples to insure you choose the best loan offer. You can learn more about comparison shopping cheap mortgages to find the best home loan for your financial situation by registering for a free home loan guidebook.

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

There are many reasons why people consider refinancing home mortgages, ranging from wanting to withdraw their cash in equity to reducing their interest rate to paying off credit card balances to lowering their payments. Some reasons are wise while others are not. Everyone has to review their own situation and decide what is best. But here are three good reasons when it would be "wise."

To Get A Better Fixed Interest Rate

When people are ready to buy a house, they have to accept the interest rates that are available at the time. However, as time goes by, it may be possible to get a better interest rate. There is more than one reason why a substantially lower rate may now be available. If bad credit was a problem when the loan was issued but the credit history has now improved, then refinancing home mortgages would definitely be a wise decision. A bankruptcy in the past or simply poor payment history is enough to cause potential homebuyers to only qualify for a bad credit mortgage. But with consistent effort to turn things around, credit histories can go from bad to good, thus qualifying for a lower interest rate.

To Stabilize Payments

Many people, especially first-time homebuyers, will often take an adjustable rate mortgage because the payments are initially lower. A good loan officer will give the pros and cons of such a loan, warning the homebuyers of potentially increasing mortgage payments. Unfortunately, not all loan officers take the time to do this ... and not all homebuyers care to listen to potentially bad news. But then, as interest rates rise, they find themselves having trouble making payments. Once in this position, homebuyers are wise to consider refinancing home mortgages in order to lock their monthly payments in so that they are not shocked every time their payment increases.

To Reduce Your Monthly Payments

Sometimes situations change and there's nothing that can be done about it. This could be the result of a divorce, a job change, a death of an income-earner, a serious illness in the family, or any number of other life-changing events. When something like this happens, many times mortgage payments are difficult to meet and refinancing home mortgages is necessary to prevent losing the home. This is a situation where it would be wise to refinance instead of letting things get out of control.

Generally speaking, the goal is to always be getting closer to getting out of debt. So if refinancing home mortgages is going to get homebuyers closer to that goal, then it is a good thing. Some people will refinance simply because the money (equity) is there and they want it. If that is the reason for refinancing, then refinancing home mortgages would definitely not be a wise decision.

Home improvement loans are the ideal option for anyone who wants to add looks and value to their home by adding some rooms, going in for fitted bathrooms and kitchens or undertaking rewiring/plumbing related activities. The ideal home improvement loan must ensure that the home improvements are in accordance with the borrower’s needs and also that it does'nt cost a borrower more than expected. The cost of a home improvement loan depends on the rate of interest that the lender charges which is again dependent on the collateral offered by the borrower.

Home improvement loan rates could also depend on the credit ratings of the borrower. If a borrower is credit challenged he/she may not enjoy competitive interest rates. However, increased demand and competition have resulted in a multitude of options for a borrower to choose from irrespective of his credit or income challenges. Online lending services have further simplified the lending process. Borrowers can now source the most competitive home improvement deals from the confines of their home or office.

When a borrower avails home improvement loans, he/she is required to pay interest only while the home improvement is in progress. The borrower then makes full monthly payments on the principle amount and interest, where monthly payments are calculated on the amount of money borrowed, interest rates and the loan term.

Predatory lending is an illegal and unethical practice that generally affects women, minorities and the elderly. The reason that some lenders resort to this practice is to pad the costs to the uninformed borrower, thereby adding to their own bottom line.

One sure sign of predatory lending is when terms are changed at the last minute, usually at closing, with the lender claiming they must be accepted for the loan to go through.

It usually takes the form of higher interest rates, higher closing costs or the requirement to purchase expensive insurance from the lender or a recommended broker.

Other forms predatory lending are downright discriminatory, but are not likely to be obvious to the borrower.

The lender can assign or try to steer people with acceptable credit to a sub-prime category, which almost always means higher interest rates and closing costs. As many as half the victims of this practice would qualify for better terms if they shopped around more.

Another version of this practice is when the lender assigns higher costs to certain people based on undisclosed credit policies. This is related to what used to be know as red-lining, where certain racial groups or entire neighborhoods either couldn’t get financing or were always charged higher rates than other with similar financial backgrounds.

A common practice is to require the purchase of single premium credit insurance, which can be much more expensive than other forms, such as annual premiums. Other insurance, such as credit life insurance may be demanded. This practice is illegal and no lender can base its loan on the purchase of insurance, except when the down payment is less than 20%. Even then you are free to shop for the best rates.

Another particularly vicious predatory practice is called loan flipping. The lender will try to convince an existing borrower that the can get a better deal by refinancing. However, in many instances, whatever savings in monthly payments might accrue to the borrower are mainly due to the draining of whatever equity the borrower has.

Predatory lenders prey on fear and ignorance, as well a certain reluctance of many people to raise objections, especially at the last moment when plans have already be made.

Some lenders are actively seeking out those in desperate straits to try to entice into these deals. They may offer to make payments on the loan for a period of time. They don’t, forcing the home into foreclosure.

Or some homeowners will sign over their homes to these people under the mistaken belief that this will save their home from foreclosure. This is, of course, simply the first step towards losing their house.

You must read and understand all paperwork associated with a loan, mortgage or credit card. If you don’t understand something, ask questions and don’t accept answers like: “This is standard practice”; This is the way it’s always done”; Don’t worry about it”; or any similar evasive answer.

If necessary hire a lawyer, go to Legal Aide or to a consumer advocacy group to have them help. Don’t feel pressured or rushed. Learn your rights.

If you are thinking about taking out a mortgage or loan and are not familiar with your rights, do a little research. Federal and state agencies abound that will help you. Just go to your local library or city hall to be steered in the right direction.

Demand that all required documents are sent to you well in advance of closing so you or your representative can review them before you sign on the dotted line. In other words take some time and expend the effort to educate yourself.

Finally, shop around for your mortgage or loan. Don’t go to the finance company down the block. An online search may reveal lenders you have never heard of willing to lend to you on favorable terms.

Once you have comparison offers from different lenders, you will know what your true cost of credit will be.

Self education is the only solution to this problem.

Acceptable Sources

One

Money you have in a bank account. Yes, they will verify the money you have in a bank account. You will need to provide copies of your bank statements (all the pages of the statement are required).

Two

Money received as a gift. They will want a signed letter from the gifting party verifying it is a gift and no repayment will be made. Most lenders require it to be notarized also. All parties must sign this letter including the one receiving the gift and those who are providing the gift.

Three

You can borrow money against real estate, stocks and bonds, land or any asset with equity. This includes second mortgage on real estate. But you must be careful with borrowing money this way because it increases your debt ratio and may lower the amount you can borrow. You can also borrow on your 401K plan, but it is frowned upon by many lenders.

Not Acceptable Sources

One

Borrowing money from family and friends. This would be considered an unsecured loan and that is a no no. This is not a good idea.

Two

Money you have stashed under your bed. No, they want a paper trail of where the cash came from.

Your best bet is to speak with a knowledgeable Home Loan Advisor who will answer all your questions and steer you in the right direction.

Hope you enjoyed reading this article,

A mortgage loan usually is the largest transaction in our clients’ lives. With that in mind, it also usually is one of the scariest. To put clients at ease, we as mortgage professionals should teach them every good and bad aspect of the loan process. By doing so, we prove ourselves as trustworthy, position ourselves as experts, incorporate other professionals into our circle and let our clients know how it benefits all parties to send referrals our way.

Building Trust By explaining the loan process and the challenges with clients’ situations, we establish competence in their eyes. With this open line of communication, we help build trust with our clients. For them, this is what can separate us from other loan officers. Furthermore, we build loyalty throughout this process, which usually translates into more referrals. Clients are much more likely to do business with people they like and to whom they are loyal. It is important, however, to handle clients’ trust with kid gloves. Once we have earned their trust, we should do everything to maintain it. Stressing the importance of honest, ethical business practices in our communication as well as through our actions will cultivate lasting relationships that will assure repeat business as well as referrals

Becoming the expert Our clients are thirsting for our information, and we can quench that thirst by providing them with reports and consultations. By answering clients’ questions, we go a step beyond gaining their trust and also become their experts.

Think about a time when you may have needed an expert — such as a doctor, mechanic or electrician — for a special service. In our dealings with them, they often convince us that their services are unique. Our clients also should have a feeling of dependence on us as experts in the mortgage field. If we, as loan officers, don’t do things to set ourselves apart as experts, we are virtually inviting our clients to see what else is out there. No loan officer likes to be shopped around or have a client negotiate fees. We also shouldn’t take for granted that our clients know everything about mortgages that we do.

Joining forces We can create an image of professionalism and credibility by using reports, specialized software and PowerPoint presentations. Teaming with other professionals also can add measurable substance to our presentations. By partnering with financial planners, insurance agents or real estate agents, we not only provide clients with more-comprehensive education, but we also introduce them to other relevant financial professionals. It is one thing to educate clients on the best ways to manage their debt through home mortgages. It is another to expose them to other experts who can ratify our strategies.

On the other hand, we also could be providing these other financial professionals with leads. They will see us as a source of business and return the favor with referrals from their client base. Meanwhile, we now help our clients view us as the most-comprehensive and educated mortgage professionals around and increase the possibility that they will refer their friends and family to us.

Coaxing referrals As we educate our clients about the loan process, we need to educate them about giving us referrals. They should know how important they are to our business as well as to our ability to provide the best service. We also can offer incentives to referral sources such as reduced origination or fee discounts. By doing this, we are showing our appreciation for the referrals — and we probably aren’t paying as much as we would for marketing and advertising. If you look at your business from your client’s perspective, you can see why someone chooses your business. You also see why someone would refer business to you. There has to be a compelling reason far beyond the canned “We give great service.” The service should be excellent, but it should not be what differentiates you from your competitors. We all should strive to give great service.

There are many other ways to offer clients something compelling. We can invest in our business by producing free reports or give clients books to increase their knowledge. If this does not work, though, we need to adjust our paradigm until virtually every client with whom we meet has a strong desire to do business with us, regardless of our fees. It is incredibly important to educate clients and be completely honest in all dealings. This not only will help close more deals without being “shopped,” but it also will help us earn more referrals.