If you're having problems in paying down your mortgage and need to get a lower rate, you can try for a mortgage refinance. But while you refinance, watch out for the common scams prevailing in the industry. Otherwise you may end up with a bad deal instead of getting some relief from the higher payment.
How to identify refinance scams:
To protect yourself from losing money in a refinance, check out the 3 warning signs such that you can identify whether your refinance deal is a scam or not.
1. Lender's failure to disclose rates, terms and costs:
When you go comparison shopping, the lenders are likely to provide you with the rates, terms and fees on different mortgages as the law demands. But if a lender doesn't want to disclose all relevant loan information, then you need to be cautious.
The most common refinance scam involves not informing you when locked in rates run out. In such a case, the lender usually quotes a new rate equal to 2-3 points higher.
2. Lender's request to sign blank form:
Avoid filling out blank forms given by your lender. Blank forms may give your lender the chance to put down any kind of loan terms as he prefers, if at all the lender has the intention to defraud you. Who knows you may end up with higher rates, balloon payments or even signing away your property title to the lender.
3. Raising your payments :
Your lender may try to push you to a higher balance or payment by encouraging you to refinance and borrow more than you can afford. Not realizing that you won't be able to afford it later on, you may accept such an offer and finally end up in foreclosure. The lender's primary purpose here is to collect more and more interest and thereby take away your home.
The best way to avoid refinance scams is to check the lender's profile and service background, take a look at his clients' testimonials, and ask questions that can help you take the right decision.
How to identify refinance scams:
To protect yourself from losing money in a refinance, check out the 3 warning signs such that you can identify whether your refinance deal is a scam or not.
1. Lender's failure to disclose rates, terms and costs:
When you go comparison shopping, the lenders are likely to provide you with the rates, terms and fees on different mortgages as the law demands. But if a lender doesn't want to disclose all relevant loan information, then you need to be cautious.
The most common refinance scam involves not informing you when locked in rates run out. In such a case, the lender usually quotes a new rate equal to 2-3 points higher.
2. Lender's request to sign blank form:
Avoid filling out blank forms given by your lender. Blank forms may give your lender the chance to put down any kind of loan terms as he prefers, if at all the lender has the intention to defraud you. Who knows you may end up with higher rates, balloon payments or even signing away your property title to the lender.
3. Raising your payments :
Your lender may try to push you to a higher balance or payment by encouraging you to refinance and borrow more than you can afford. Not realizing that you won't be able to afford it later on, you may accept such an offer and finally end up in foreclosure. The lender's primary purpose here is to collect more and more interest and thereby take away your home.
The best way to avoid refinance scams is to check the lender's profile and service background, take a look at his clients' testimonials, and ask questions that can help you take the right decision.
