As with any industry, the mortgage business has both good and bad companies. On the one hand, the majority of Arizona mortgage lenders are fair, honest institutions that have a genuine interest in assisting borrowers. These lenders comply with the law, are candid with their clients, and do everything in their power to structure loans in a reasonable and affordable way. On the other hand, predatory lenders are not uncommon in the mortgage industry. These lenders exploit borrowers, employ deceptive tactics, and value profits above all else. Because bad lenders are not always easy to identify at first, many borrowers find out too late that they have selected a disreputable mortgage lender. To help you distinguish the good lenders from the bad, we’ll explain how to recognize the red flags that typically identify an untrustworthy Phoenix area mortgage lender.
Lack of Candor
A good lender will be straightforward with borrowers about up-front charges, interest rates, closing costs, and other fees. Your Arizona mortgage lender should freely disclose this information from the beginning so there are no surprises. If your lender equivocates about the rates and fees of your loan, you should take your business elsewhere before signing any documents. Your lender should spell out your APR, application fees, origination fees, closing costs, etc. plainly without any prompting. A failure to do so usually indicates that the lender is hiding something.
Reluctance to Justify Fees
When your lender provides you with an estimate of your loan’s rates and fees, you have the right to question any expense related to the mortgage. If a fee or rate seems unfairly high to you, you can and should request a justification of the charge from your lender. Arizona lenders who are reluctant to justify their fees and charges are usually not institutions with which you want to do business. Likewise, a bad lender will often refuse to negotiate fees and interest rates even if they provide a justification of the expenses. Your mortgage rates and terms are not set in stone until you sign the paperwork, so watch out for lenders that regard these features as nonnegotiable.
Absence of Credentials
Bad lenders typically lack the credentials requisite for mortgage brokers. When searching for a mortgage lender in Phoenix, Tucson, or other major Arizona city, stay away from institutions that are not certified mortgage brokers. To be legitimate, the certification must come from the National Association of Mortgage Brokers. Certified brokers are trained in all aspects of mortgage lending and will serve as knowledgeable guides during the borrowing process.
No Emphasis on Customer Service
Customer service and satisfaction should be your lender’s number-one priority. If you find a lender that doesn’t seem to emphasize customer service, it’s probably a red flag that the lender values profits over customer satisfaction. Referrals are an excellent way to evaluate a lender’s level of customer service. Good Arizona lenders will come highly recommended by friends, family, colleagues, etc. and will gladly provide you with a list of satisfied borrowers. If your lender fails to instill trust or seems inattentive to your needs and concerns, you should solicit a mortgage loan from another institution.