With the real estate market in its current fragile condition, more and more people are becoming desperate to buy their own home. However, this desperation has not gone unnoticed by a few fine eyes who offer risky real estate deals which may cause the apparently happy owners their home.
1. Lending Hard Cash Many lenders allow potential home owners to take hard cash to finance their home. This is very risky because the contract involves sky high interest rates and may even require the borrowers to put up a lot of collateral. Easiest way to avoid it is to wait and save up some money. Desperation may get you a home now but you can lose it later.
2. Tax credit Advance FHA approved lenders are allowed to give eligible borrowers to take an advance on their tax credit to pay their tax credit. The easiest way to avoid it is to simply say no and not be tempted by the easy money.
3. A second mortgage before the first Many FHA approved lenders give 3.5% of your down payment in the name of a second mortgage and usually at a high interest rate. The problem is that keeping up with two mortgages becomes very difficult in the long run. The easiest way out is to avoid it all together and wait a little longer to buy a house.
4. Lending from the Unlicensed - Unlicensed FHA lenders are sprawling up everywhere and charging for many things that would otherwise be free. In addition, their interest rates may be higher than state permitted. To avoid it, avoid unlicensed lenders.
5. Quick Switch Deals FHA insured loans state that any home that changed ownership recently cannot be sold or have an ownership change in ninety days or less. Many buyers, without knowing, get a mortgage and find out later that they cannot buy the house. They now have to pay back the money for a house they do not own. To avoid this risk, ensure that there were no ownership changes recently.