The mortgage lending industry generates billions of dollars in profits for lenders every single year. Unfortunately, homeowners also lose a lot of money to scams. While most lenders do not use tricks to get property owners to refinance their mortgages, there are many mortgage refinance scams out there. It is crucial for consumers to learn how to identify these scams to ensure they do not fall prey. More tips are provided on wealthymillionaire.com on how to avoid mortgage refinance scams as well as how to grow wealthy by paying off loans quickly and using insurance policies to protect not just their wealth, but also themselves.
Why Refinancing is Important
After procuring a mortgage, property owners can refinance their mortgage for a couple of reasons. For one, they might have paid off their bad debts and improved their credit score, so they can now qualify for a cheaper home loan. Secondly, the economy might have improved significantly, leading to interest rate reductions, so refinancing can be done to lower the rate of interest applied on a fixed rate mortgage. It is also possible to refinance to borrow against the equity built up in the property over the years. Consumers may also decide to refinance a mortgage to convert their loan from an adjustable rate mortgage, which is unpredictable, to a fixed rate mortgage. Refinancing can also be done to avoid foreclosure.
Scammers understand all the reasons why consumers may want to refinance, and they use these reasons as bait to get property owners to provide them with their personal details as well as financial information.
Common Mortgage Refinance Scams
Knowing how scammers trick property owners and the various types of scams can help consumers to protect themselves by identifying and avoiding mortgage refinance scams. The following are warning signs of a scam:
1. Receiving Offers From Programs You Never Applied for
While it is normal to receive genuine refinance offers in your email, you should be wary of emails about programs you’ve never heard of nor applied for. You have to be careful of emails with online forms requesting your personal details or financial details, even if they seem genuine.
2. Unreasonably Low Interest Rates
Scammers understand that borrowers are always looking for low interest home loans when thinking about refinancing. That is why they often offer guaranteed low interest rates that may seem like a dream come true for most borrowers. To enjoy the low rate mortgage refinance, however, these scams usually require the consumer to fill out a form within a given time frame.
3. Nominal Fees
Some scams may even require the consumer to pay a small or even insignificant fee to have their application processed. However, this is just a way of getting the financial details and personal information of their targeted victim. You will also come across scammers asking the customer to sign over their title deed to get help with refinancing.
It is important to note that scammers usually ask for a variety of information, including full name, e-mail address, home address, phone number, date of birth, social security number, and many others. To avoid falling prey to these scams, it is crucial you ignore all emails from sources you neither know of nor trust. Consumers should also avoid phone calls with special offers on mortgage refinancing.
While some of the offers you receive may be legitimate, you need to exercise due diligence first before considering them. Start by doing some research online about the company and what they offer. You can visit the main website of the company to check if the offer sent to your email has been advertised on their website. You can even use the contact details on the company’s website to ask about the offer. If it is genuine and comes with the best terms and conditions, you can consider the offer together with other genuine offers. If not, you should move the email to the spam folder.
How to Protect Yourself From Scams
You can easily avoid falling prey to scammers by observing the following tips:
1. Be Proactive and Reach Out to Your Lender
If you need to remortgage your house for whatever reason, you have to be proactive. Reach out to your mortgage lender instead of waiting for scammers to reach out to you with amazing offers. The best place to refinance is usually with your original mortgage refinancier. If you are not happy with what they are offering, you can get in touch with other credible lenders. This will help you avoid scams.
2. Delete or Move Suspicious Emails to the Spam Folder
Anybody can be targeted by scammers, so you need to be careful whenever you receive an email from unknown sources. There are two actions you can take when you get these emails. First, you can move suspicious emails to the spam folder. Just make sure you don’t open these emails as they can also be harmful to your computer. Secondly, you can delete all suspicious emails you receive in your mailbox.
3. Don’t Pay Upfront Fees
Most consumers should be wary of paying upfront fees even if the deal is genuine. Scammers may even try to justify their demand for upfront fees claiming it will enable them to get your application started. However, you should avoid paying any upfront fees for whatever purpose. According to the Mortgage Assistance Relief Rule, it is illegal for a company to collect fees upfront before the client receives and accepts the offer.
If you are thinking of refinancing your HECM because you are having difficulty keeping up with payments, consider getting in touch with the Homeownership Preservation Program, which is a non-profit that can sort you out.
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