Consumers Should Do Their Homework on Home Loans
Attorney General Roy Cooper joined consumer advocates across the country to highlight the importance of financial literacy as part of National Consumer Protection Week. This year's theme is "Financial Literacy: Earning a Lifetime of Dividends."
To avoid becoming a victim of abusive lending, the North Carolina Attorney General's Office recommends that consumers follow these tips:
Be wary of loans offered through door-to-door sales, by telemarketers, or by construction companies in conjunction with construction services.
Be suspicious of lenders or brokers who guarantee approval regardless of your credit history or who pressure you to act before you are ready.
Shop around. Interest rates and fees vary widely among lenders. Don't assume that you won't qualify for a loan from a traditional lender.
Ask about fees and points before you apply for a loan. If you are considering a loan with a variable interest rate, make sure you understand how much the rate may fluctuate.
Read the entire loan application carefully and make sure you understand it before signing. Watch out for hidden terms, such as prepayment penalties and balloon payments. Don't sign a loan form with blank spaces. It is also wise to have an attorney review your loan before you sign.
Contact a nonprofit credit counseling agency for help in determining whether you can afford your loan. Check with the National Foundation for Credit Counseling at 1-800-388-2227 or www.nfcc.org to find a reputable local counselor. Also, make sure your lender or broker is licensed by checking with the North Carolina Office of the Commissioner of Banks at (919) 733-3016 or www.banking.state.nc.
Cooper has led the fight against federal regulations that could block states like North Carolina from enforcing their own predatory lending laws. North Carolina's law, which Cooper authored as a state senator, limits prepayment penalties and bans abusive practices such as loan flipping and packing of single premium credit insurance into loans. The law, enacted five years ago, was the first of its kind in the country.
Organizers of the sixth annual National Consumer Protection Week include the Federal Trade Commission (FTC), AARP, the Better Business Bureau, the Consumer Federation of America, the U.S. Postal Service and the National Association of Attorneys General, among others. More tips for consumers and businesses and a list of resources on financial literacy are available via the National Consumer Protection Week website at www.consumer.gov/ncpw.