How to Avoid the Common Mortgage Frauds | 2021 Guide

Losing a home might be one of the most devastating things that can ever happen to any individual. This home can be either your future dream home you’re willing to purchase or your own home where you are residing for so many years now.

Scammers and fraudsters are quite common when it comes to property dealing and mortgage with any Dallas mortgage lending company. 

The good news is, there are several ways you can avoid this from happening. This article is going to be your ultimate guide to avoiding common mortgage frauds so that you can be free from any scammers and cheats.

Beware of odd interest rates

Beware of those mortgage lenders who make you go towards a higher interest rate or a low-interest rate that includes prepayment penalties, or a balloon payoff.

If the interest rate seems too good to be true, then it definitely must. Here’s when you shouldn’t go for a high-interest rate that very instant.

If your mortgage lender is providing you with a very low-interest rate, then there is definitely something fishy going on. The reason why he must be asking for lower interest rates might be due to higher payments or points, that are part of the total mortgage that you will end up paying somewhere else. Therefore, you must avoid balloon payments and prepayment penalties at all costs.

Check license

Before making a deal with your mortgage lender, it is important to get referrals for real estate and mortgage professionals. Moreover, you must also not forget to take a look and dig deep into the licenses of the industry professionals with state, or regulatory agencies.

Any pressure from the lender should be considered a red flag.

Remember- a mortgage is a huge commitment, and you should have enough time to think about it, weigh all the costs, and even compare it with other home loans. In case your mortgage lenders put any pressure on you to take on a rate that is higher than you feel or you can afford, consider this as a red flag. Any pressure from the lender’s side should be a raise of concern. 

Read your paperwork thoroughly

Not being told the risks of an adjustable mortgage rate is a big red flag and a common way to scam homeowners. 

You must always read all the paperwork carefully, and also know how much you will have to pay in the future. Remember, this is your legal right to know. In case your mortgage lender stalls or refuses to let you know about the future costs, walk away.

Never sign documents with blank fields

When working with documents, you must never provide your signature that contains any blank lines. This is because missing content is more of a telltale signature of a mortgage scam or fraud.

This is why you should consider spending an ample amount of time to evaluate any document you are provided with, in order to ensure there are no blank lines that a fraudulent mortgage lender may fill in later with false information. Besides that, in case anyone tells you that you can fill in a particular part of a document later on, don’t believe them.

You must ensure to read and review all of your documents that are signed at closing, to make sure there are no other contractual obligations added. Remember, if you don’t understand any part of the document, don’t sign it. Connect with an attorney who can help you to review all these important documents for you.

Run background checks

Make sure to run a background check on your mortgage lenders. This is because most scammers and fraudsters make themselves appear as if they are affiliated with a government agency. 

They do this in order to trick loan borrowers into believing they are entities to the benefit of a government program, committing to a home loan that must be repaid. Therefore, apart from conducting background checks, you must also carefully assess and determine the names. Seals, and logos made by your mortgage company.

Never give money upfront to a non-lender

This is another common scamming technique fraudsters use. Beware of any individual or company that asks you to pay upfront as a fee to negotiate or process a loan or other lending products.

Beware of those who ask you not to consult your lawyers

Remember to never work with those people who ask you not to consult your lawyer or credit housing counseling. The idea here is to make you steer clear of those people who will help you make smart financial decisions. The wisest thing to do would be to work with those people who you actually know of, if possible.

Lenders who ask you to lie on your application

This is another common scamming technique of mortgage lenders. Keep in mind that no legitimate mortgage lender will ever ask you to lie for anything, especially on your application.