The mortgage industry, like every other industry, has no exception from fraud. The housing market has a lot of potential and for some people; it is the biggest purchase they will make. Mortgage fraud is described by the misstatement and omission or misrepresentation by an underwriter or lender to fund a loan to a buyer. Fraud is more common in growing and successful markets. The scammers disguise the home’s value with a much affordable price to lure buyers.
Check out for undisclosed deals between you and the seller that are not indicated in your mortgage documents by the agency. If you make a deal with a seller or an agent that involves you giving or receiving money for some issue with the property, you are being scammed. All deals concerning the purchase should be documented in a contract for legal purposes.
Lenders may impose excessive loan costs on your interest rates. The lenders disguise the excess money as a form of higher interest rates without disclosing the information to you. most mortgage interest are fixed no matter the amount you are loaned. Large mortgages close with an interest of 5% of the total. Always talk to different lenders about the prices and interest cost before making a decision. Relying on one lender may cost you without your knowledge. Sometimes, lenders may add additional interest rate when you are paying the full amount after clearing the interest. It is usually higher than the original interest. These additional payments are illegal on self properties but may apply in investment. If you own a home, report a lender trying to scam you without any agreements.
Some lenders charge a prepayment penalty of 5% and more. These are fees charged when you pay your loan too early. This type of transaction is illegal and a scam. When asked to pay prepayment penalties by a lender, look up the information in your agreements and documentation and ensure you consult with your lawyer before making any legal decisions.
When you are trying for a second mortgage make sure all you mortgage information is disclosed to your first lender. Second lender mortgages may try to scam you out of your first mortgage. Stay away from money gifts. They are loaned in disguise given to the buyer by the lender. You are still going to pay the loans back and they will have an effect on you income. Money down loans are scams meant to lure people into buying homes they cannot afford.
It can be stressful to lose your money to a scammer after spending time saving or receiving a mortgage that you are still going to pay. You end up without a home or with a home of lower standard than you paid for. Scammers might even take away your savings. Make sure you know who you are dealing with when buying your house. Get referrals from friends and family for real estate and mortgage professionals. Check lenders licences before finalizing any deals.