For most families, buying a home is the biggest and smartest purchase they ever make. Unfortunately, not all loans are in their best interests.

When loans hurt instead of help, they can quickly lead to foreclosure and even bankruptcy. It’s important to learn the warning signs and common problems associated with predatory lending, and to ask the right questions when shopping for low cost loans.

The term “predatory lending” covers a wide range of abusive practices. Some may be predatory for one borrower but not for another, because everyone’s circumstances are different. Predatory lenders often take advantage of first-time homebuyers and others who may be vulnerable to high-pressure sales tactics, so it pays to know how to protect yourself and who can help.

Possible warning signs of a predatory loan:

• It sounds too easy: “Guaranteed approval” or “no income verification” sometimes indicate that the lender doesn’t care whether you can afford to make the payments over the long haul.

 

 Continue Reading: How to Avoid Predatory Lending, Part 1,