When I think of a red flag, it makes me think stop. Go the other way, do not proceed. What about you? Someone was telling me about predatory lending a few months ago and was asking how to aovid it. The person went on to tell me how it was very rampant in her community. I imagine that she was in different communities of ethnicity; as well as could be an elderly community. These are pretty common red flags for consumers to be aware of:
1) Upfront money. When you go to a lender, they are supposed to be giving you money. Not you giving them money.
2) Adjustable interest rate. I am not a fan of adjustable rates because of the end result. It is apparent that ARMs are recommended to a lot of people unknowing all the details of what it really is.
3) Too large a loan. This is a big one in my opinion because when consumers are qualified for a home loan, they are qualified at a big amount. This does not mean you have to choose a house that will utilize all of this. I usually recommend some where in the middle. If you max yourself out with the home loan, you could encounter other financial problems because you did not plan.
There are other red flags that we can discuss later. I felt these were some that many would recognize if they were not aware of predatory lending.
