| Too many investors go to closing and | | | | for a fixed-rate loan, you may end up |
| sign documents without ever reading | | | | with a surprise at closing in the form |
| them, taking the word of the | | | | of an adjustable-rate loan that is fixed |
| "professionals" involved in the closing. | | | | only for a certain time period, such as |
| This is a huge mistake, unless that | | | | two years. In some cases, you may be |
| professional is your lawyer, and he or | | | | promised a five-year fixed rate and end |
| she has read and understood the loan | | | | up with a three-year fixed rate. |
| documents. Don't presume that the lawyer | | | | Moreover, read carefully about how the |
| you are paying represents you. | | | | loan adjusts. Some ARM loans can only be |
| Too many investors go to closing and | | | | adjusted twice a year, others can be |
| sign documents without ever reading | | | | adjusted monthly. |
| them, taking the word of the | | | | Finally, look at the amount the loan can |
| "professionals" involved in the closing. | | | | adjust each time, and the maximum rate |
| This is a huge mistake, unless that | | | | the lender can charge over the life of |
| professional is your lawyer, and he or | | | | the loan. All of this will be spelled |
| she has read and understood the loan | | | | out in the mortgage note. (Hint: if the |
| documents. Don't presume that the lawyer | | | | note is titled, "Adjustable Rate Loan," |
| you are paying represents you. Many | | | | it's a dead giveaway that you don't have |
| banks have lawyers that represent them | | | | a fixed-rate loan!) |
| and charge that fee to the borrower. | | | | Owner-Occupied Loan-If you apply for the |
| Mortgage brokers and lenders are not by | | | | loan as investor, the mortgage broker |
| their nature dishonest but there are | | | | may submit it for approval as an |
| enough shady characters that try to slip | | | | owner-occupied loan, either by accident |
| things by on borrowers. In some cases, | | | | or on purpose. Read the documents |
| it is a mistake by the lender or a | | | | carefully. Do not sign your name to any |
| miscommunication between the mortgage | | | | document saying that you promise to live |
| broker and the lender, both of which | | | | in the property if you aren't actually |
| result in the borrower getting a | | | | going to do so. In most cases, the |
| different loan than what was promised. | | | | mortgage or deed of trust will have a |
| The most common things that are | | | | rider (addendum) that says you do not |
| incorrect on a loan are: | | | | intend to occupy the property as your |
| Prepayment Penalty-The most common | | | | principal residence. |
| "hidden" clause is a prepayment penalty | | | | The bottom line my friends, is READ |
| that the lender does not disclose or | | | | before you sign. Once you sign, you are |
| that was supposed to be omitted. The | | | | out of luck, because there's no |
| only way to know for sure is to read | | | | three-day right of rescission for an |
| your mortgage note to see if there is a | | | | investor loan! |
| prepayment penalty clause. In some | | | | Jump to the top of this page |
| cases, a lender may say there is no | | | | Click Here for more info for Read Before |
| prepayment penalty, but has inserted a | | | | You Sign! |
| "soft" prepayment penalty (applies to . | | | | Written exclusively for by Attorney |
| In addition, read carefully how much the | | | | William Bronchick, Certified Registered |
| penalty is, and how long after the loan | | | | Nationally-known attorney, Author, |
| is originated the penalty applies. | | | | Entrepreneur and Speaker. |
| Fixed versus Adjustable Rate-If you pay | | | | |