Refinancing can be defined as a way for paying off your existing
mortgage by taking out a new one. But before taking a loan,
think carefully whether you can make the required payments or
not, otherwise you could lose your home as well as the equity
you've built up.
There are certain lenders who target older or low-income
homeowners or those who have credit problems, and offer loans
based on the equity in your home and not your repayment
capacity. It could be very expensive to borrow money at high
interest rates and credit costs, even if you use your home as
collateral.
Many a times certain problems arise after closing of the
previous mortgage. The old mortgage company claims that the old
mortgage is not yet paid off i.e. they had not yet received the
money from the new lender although you signed all the documents
and got the home refinanced. This generally happens when you may
have chosen a wrong lender for refinancing, but it can cost you
a lot. So, at the time of refinancing you should be aware of
lenders who:
* Ask you to fill in incorrect information on the loan
application like if he asks you to fill an income higher than
the actual one.
* Ask you to apply for a loan more than you need.
* Pressurizes you in accepting monthly payments plan which you
can't afford to make.
* Does not provide the required loan disclosures.
* Misrepresents the kind of credit you're getting.
* Promises one set of terms when you apply, and gives you
another set of terms to sign; without a proper explanation for
the change.
* Ask you to sign blank forms and tells that they'll fill in the
blanks later.
* Says you can't have copies of the documents that you've
signed.
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