| If you are in the process of refinancing your home | | | | to arbitration as a condition of having your loan |
| loan, there are a number of common mistakes you | | | | approved. If you agree to arbitration you are forfeiting |
| need to be aware of. Here are three home loan | | | | many of the rights and protection you receive under |
| refinancing pitfalls you need to keep an eye out for | | | | the law. Agreeing to arbitration means that you agree |
| when refinancing your mortgage. | | | | to a third party arbitrator resolving any legal disputes |
| Watch Out For Prepayment Penalties | | | | you have with the lender. Never agree to arbitration |
| A prepayment penalty is a clause in your loan contract | | | | with any mortgage lender. |
| that requires you to pay a penalty if you refinance or | | | | Watch Out for High Interest Rates and Fees |
| sell your home before the penalty expires. Prepayment | | | | Predatory mortgage lenders often try and sell |
| penalties can be expensive, mortgage lenders often | | | | subprime mortgages to homeowners with good credit. |
| charge up to six months worth of interest on 85% of | | | | This means you are taking out a bad credit mortgage |
| the original loan balance. Predatory mortgage lenders | | | | regardless of your credit rating and will pay higher |
| include excessive fees in their loan contracts to | | | | interest rates, lender fees, and points. The only way to |
| discourage you from refinancing the loan. If you have | | | | know for sure that what you're paying is fair is to shop |
| good credit there is no reason to accept a home loan | | | | from a variety of mortgage lenders and compare all |
| with this penalty. | | | | aspects of the loans. You can learn more about |
| Never Agree to Arbitration | | | | comparison shopping for the best mortgage by |
| Predatory mortgage lenders often ask you to agree | | | | registering for a free mortgage guidebook. |