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