(and How to Avoid Them)
1. Hidden Costs and Fees
The Red Flag: A low advertised rate might catch your eye, but some lenders offset this with hidden fees for setup, discharge, or rate buy-downs.
How to Avoid: Always ask for a breakdown of fees upfront and request a comparison of the APR (Annual Percentage Rate) instead of just the interest rate. The APR considers fees and gives you a clearer picture.
2. Lack of Transparency on Terms
The Red Flag: If a lender avoids discussing the fine print, it’s a warning sign. Restrictive clauses like harsh prepayment penalties or “bonuses” that need repayment could cost you.
How to Avoid: Insist on clear explanations of terms like penalties for breaking the mortgage, prepayment allowances, and portability features.
3. Pushy Sales Tactics or Unrealistic Promises
The Red Flag: A lender who pressures you to sign quickly or promises approvals without proper documentation might not be trustworthy.
How to Avoid: Take your time to review offers. Compare at least three lenders, and look for a broker or lender who values education over pressure.
Choosing a lender is a significant decision—don’t let these red flags trip you up. Ready for advice tailored to your needs? Let’s chat!
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