Be wary of high-pressure sales pitches, such as claims that an offer is good only for a limited time.  If the offer is good and legitimate today, it should still be good tomorrow.  Rates however due change daily and sometimes twice a day if the bond market is unusually active.

Avoid loans that include extras you don't need such as prepaid single premium credit life insurance.  Predatory lenders may require that you purchase a credit life insurance policy as a condition of getting a loan.  Extras will be added to the total cost of your loan and make your payments and costs higher.

Be wary of loan offers by mail, telephone and email, or made in newspapers, radio, and television.  If an offer is too good to be true, it is.  If the offer is that much better than everywhere else, they would not have to advertise it. 

If you look in the newspaper, you will see new automobiles advertised for much less than you know you can walk in to the dealership and buy them for.  Similarly, you will see advisements for mortgages that are a much lower rate than you can possible get. 

One metro Boston savings bank repeatedly advertises a No Points No Closing Cost loan for far below the actual rate.  The assumption is that it is a 30 year mortgage which is the norm, but close examination if the fine print shows that it is in fact a 10 year mortgage.  These are “bait and switch” tactics. 

Many newspapers have to rate chart in their real estate section.  This is not a sampling of rates taken by the newspaper, but an advertisement paid for by the listed companies.  The advertisers are trying to get you to call them solely based on the fantastic rate they are advertising.  If an offer is solely based on rate, chances are that’s not the correct market rate.

Do not rate shop, but shop for a quality lender and loan officer.  A professional loan officer will rate shop for you.  “Rate shoppers” believe they are doing the correct thing to find the best rate.  However, essentially what “rate shoppers” are doing is “shopping” for the loan officer that will tell them the lowest rate. 

Chances are that person “telling” you the lowest rate will be an unscrupulous predatory lender that has no problem lying to you.  This is why “rate shoppers” get taken advantage of; they unknowingly seek out dishonest versus honest lenders.

Be particularly careful shopping rates on the Internet.  Generally, you are required to give your SSN number to get a rate and they will pull your credit.  Each inquiry lowers your credit score.  Please see our Understanding Your Credit, Credit Scores, Identity Theft sections for more information.

Not all high interest loans are predatory.  If you have a high-risk loan, your rate will be higher.  High-risk loans include borrowers with poor credit, high loan to value loans, limited documentation, and so on, particularly if these issues are combined, or on investment properties, or multifamily properties. 

If you are being refinanced out of foreclosure, or bankruptcy, or for example are getting a Stated Income, Investment property, 100% financing loan, on a multifamily, you have to expect a higher rate due to the combination of risk factors.