How to Avoid a Mortgage Scam

Scams are everywhere just waiting for you to take the bait if you aren’t careful. For many homeowners, their home is their biggest asset, so dodging a mortgage scam takes on extra importance. These scams can take the form of false promises for better mortgage terms, wire fraud phishing schemes during the closing process, stealing your home equity with reverse mortgages, loan flipping (where the borrower is persuaded to repeatedly refinance the same loan so the lender can collect fees) and more.

To avoid being a mortgage scam victim, read on for some helpful tips.

• Shop around for qualified lenders. Check their status on the Better Business Bureau website.
• Your mortgage payment should not exceed 28 to 32 percent of your gross monthly income depending on the lender. If you have a lender that approves you despite this, run the other way.
• Never give money to a lender without a contract.
• Don’t divulge personal or banking information in response to unsolicited mortgage offers.
• Always read the fine print on any documentation and understand the terms before signing.
• Monitor your credit report for any unauthorized transactions.
• Don’t work with lenders who discourage you from talking to a financialprofessional or lawyer.
• Avoid lenders who bully or try to pressure you.

For one final word of advice, be weary of offers that seem too good to be true. As the saying goes, “If something sounds too good to be true, it probably is.”