How to Protect Yourself from Mortgage Scams

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How to Protect Yourself from Mortgage Scams

Mortgage scams are a particular concern that’s becoming more common over time. Such a fraud covers a broad range of activities, such as inflating an appraisal to get a mortgage higher than a property’s worth and pretending to provide financial help to a homeowner who’s seeking help. Mortgage fraud can be two ways; it’s either defrauding the lender or the homeowner who may be in financial trouble.

When you are buying your first home, you should be wary of mortgage scams. You may end up in worse financial shape than before, and it can even cost you your home. Here are some tips to protect yourself and your future house from these scams. 

1. Conduct thorough background checks.

Paying attention to details is an effective way of protecting yourself from becoming a victim. If they are not referrals from friends and families, have you tried examining the names, logos, seals and representations made by your mortgage lender? Some work hard to deceive target clients and make it appear that they are government-affiliated to lure you into making transactions with them.

Before you engage with a potential mortgage lender, make a thorough background check about them. You would want to work only with a reputable lender or mortgage broker. Obtaining low rates may be important, but having a broker with a respected name is something to consider also. 

2. Enlist the help of a conveyancer.

Looking for the service of a conveyancer to help you out is also a good consideration. Conveyancers will research the property and do background checks, as well as liaise with the mortgage company. They will give you information and advice about the sale or purchase of property and prepare legal documentation for property transactions.

3. Avoid paying advanced fees.

You should never pay any fees upfront. Firstly, it’s unfair. They are taking advantage straight off. Secondly, advanced fees may be generally prohibited by laws.

You should also be mindful of excessive processing and documentation fees on your application and loan processing fees. 

4. Do not transfer the title of a property.

A title is a deed, an evidence of ownership. It’s a legal document that will prove your ownership of your home, and it can be a target for some scams.

Even if they would say that it’s necessary to put your property in someone else’s name or in a trust so they can negotiate with the bank on your behalf, don’t do it. Transferring the title of your property will remove your name from it, and the scammers may seize your property without you knowing. They can assume control of it. 

Don’t lose your home to scammers. Retain your name on the title and you are reducing the risk of mortgage fraud in your transaction.

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5. Do not sign documents with blank fields.

As you should be keen on details, make sure to read and review all documents that will be presented to you. Before you sign anything, make sure you understand the pages and that there’s no missing fields or pages. Review your contractual obligations well and see to it that nothing more is added. When in doubt, you can ask for professional or legal help. Don’t ever sign any document with blank fields.

Blank fields on documents can be a sign of mortgage fraud. They can fill it out with false information. Don’t let them fill it out later. With your official signature on it, you’ll bear the consequence if something goes wrong. This may cost you your property. 

Paying attention to details is an effective way of protecting yourself from becoming a victim. If they are not referrals from a reliable home loan comparison site, friends or families, have you tried examining the names, logos, seals and representations made by your mortgage lender? Some work hard to deceive target clients and make it appear that they are government-affiliated to lure you into making transactions with them.

6. Watch out for ‘no money down’ loans.

This can be a gimmick to lure people into buying a property that they can’t really afford. Although it may work for those with stable income, it won’t for many. Don’t be an easy prey, no matter how much you want to avoid a downpayment. It can cost you more if it’s a fraud. Remain in control of your situation and keep those scammers away.

7. Be careful in sharing your financial information via email or phone call.

Before you wire down any money, confirm it with a trusted representative. Make sure that you won’t need to email any of your financial information. It’s not a secure way of doing it. Even if they call you to verify your personal and financial information, check for the legitimacy of that call. It can be a scam.

8. Be vigilant.

In addition to paying attention to details when doing transactions for your new home, common sense will also help you avoid mortgage fraud. If something is too good to be true, it probably is. Despite the opportunity and seemingly good offer, there may be a catch somewhere. Be mindful of this tactic.

Fraud can also change in form. One should practice caution to detect and avoid it early on. When a mortgage plan looks complicated, it probably is. Stick to simple plans that can give you the best results.

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