Refinance scams have been quite prevalent as of late. Although they have been occurring for a very long period of time, they have picked up remarkably as of late. This is why it is absolutely important that you know everything to ensure that you are able to avoid these scams with the greatest of ease. In case you do not know, the housing collapse that happened back in 2018 was a terrible financial debacle. Some would even go as far as claiming that it was hands down the worst financial setbacks in history.
The disaster gave birth to a lot of different problems down the line. Homeowners in particular started to face a great deal of problems and continue to do so to this day. You may be surprised to find out that a lot of people had remaining mortgages that went underwater. Underwater in this context is not literal. What it means is that the home’s debtors had to pay a higher amount of money in comparison to the house’s actual worth. It caused a major decline in the economy and also created a great deal of chaos among homeowners who bought their houses on mortgage. There were protests and a lot of other similar issues that got out of hand pretty quickly.
Thankfully, things started to settle down after some time, but the effect that it had remains to this day. The fact of the matter is that you or anybody else for that matter can fall victim to these kinds of problems which is why it is absolutely important to make sure that you know everything you need to in order to prevent this from happening to you.
Refinancing Scams are More Common than you Think
As mentioned earlier, refinancing is more common than what it may seem. A lot of people who are stuck with unpayable underwater mortgages try to get them refinanced. It is considered to be one of the best options to make sure that they are able to successfully buy their homes without losing out on them. While that may be true, there are tons of scam traps that people unknowingly fall into. Once again, the housing collapse is one of the main culprits behind this problem. Refinancing scams can have a domino effect; it can lead a large number of people down the same path causing them to lose a tremendous amount of money. It could subsequently cause another recession. And as things currently stand, no country can afford to go a recession with economies already close to a collapse.
There are a large number of fraudsters hanging about, waiting for the right opportunity to catch their prey and rip them off their money. These fraudsters take a very methodical approach when it comes to creating refinancing scams. They do everything possible to make sure that they look like the real thing. They even study the basics and ins and outs of refinancing, making sure that they talk you into considering refinancing, and once you do, they will catch you off-guard.
Compared to how the housing market was after the debacle that happened back in 2008, it is significantly better. However, the predators that scam people still loom large waiting for their next victim. Unfortunately, there are a large amount of unsuspecting homeowners who buy into their refinancing scams, consequentially losing a great deal of money. If you happen to be someone who has mortgaged a house and is facing a great deal of difficulty paying off your money, we will discuss some helpful tips to make sure that you are able to avoid financing as well as refinancing scams.
Scammers are Capable of Wiping Out all of Your Equity
As we discussed earlier, homeowners can get a great deal of financial relief with the help of refinancing. However, just like every other thing in life, there are several risk involved. However, the risks in this one are way higher than the risks involved in other things. That being said, with the help of refinancing, some people are also able to get their existing loans restructured. Some of them are even able to get lower interest rates to go along with them.
Some people refinance by getting a completely new mortgage for a higher amount that they owed initially. With this, they are able to utilize the difference to pau of a large amount of debts such as college fees for their children. You may even come across people who solely seek refinancing for a better interest rate. People who t possess mortgages with variable rates often look for mortgages with fixed rates, especially when the rates begin to rise. Things like these happen quite frequently with people who possess ARMs, which are also commonly referred to as adjustable rate mortgages.
For situations such as these, there are a large amount of scammers who have successfully come up with a scheme that looks like just what an unsuspecting homeowner with outstanding mortgages would require.
For instance, the homeowner is looking for refinancing in order to cover the fees of their children’s education. This is where loan flipper scammers will come into play. They will methodically hunt down people in this predicament and contact them. In some cases, the fraudsters also tend to randomly contact the homeowners until they are able to come across someone who precisely fits the description.
In most cases, the scheme that these scammers create is to offer a certain type of refinancing mortgage that would assist the owner in freeing up his or her cash. These refinanced mortgages are presented with lower rates, something that people often buy into, especially if they are not aware about how refinancing scams work. Also, these scammers tend to be quite persistent. The will offer you another refinancing offer once you are through with the first one.
What ends up happening is that quite a lot of unsuspecting homeowners end up with various hidden fees and incurring closing costs. In most cases, the fees that the scammer ends up gathering will often be sky high. Most people who fall victim to these schemes are often unaware of their fees. What ends up happening because of this plot is that the refinance completely drains the house’s equity, giving the scammer cold hard cash to walk away with. Add to that the excessive fees that they are already charging, and you have a scam that often leaves people with no money whatsoever.
So to sum things up, it is paramount that you are vigilant whenever you are seeking refinancing. Make sure that you avoid these kinds of transactions just by calling your bank or lender for a deal. Instead, you have to be significantly more vigilant. It would be in your best interest to seek refinancing with community banks as they often turn out to be a helpful yet reliable resource.
Fraudsters are Often Lurking around Refinancing Programs
There is no shortage of refinancing programs out there. Of course, a large number of these programs are legitimate and help people with bad mortgages out in a variety of different ways. Unfortunately, there are a lot of fake ones to. These are devised by various fraudsters who often lurk around real refinancing programs. What these people do is copy what these programs are doing and make changes to ensure that they are the ones who end up benefiting in the end. While all of this might sound really simple, it actually isn’t. There is a lot that goes into it. As a matter of fact, it would even be fair to say that it is more like a study than anything else.
This is why a large number of people fall into these traps without ever finding a way out of them. They only find out that they have been ripped off when the scam is complete. Until then, it is too late and is almost impossible to salvage the situation. That being said, you can use this information to make sure that you always stay vigilant and one step ahead of the scammers. It is perhaps the most efficient way to fend of lurkers and shield you from losing money to them.
Therefore, it is highly important that you choose your refinancing program very carefully. The pitfalls involved are too much and just one small step can cause you a significant amount of financial damage. It is very hard to recover from a finance scam. More often than not, people end up losing hope from refinancing once they have been ripped off. Because of this, they end up paying the extra money that they have to pay after having an underwater mortgage. It is a painful ordeal and can cause a significant dent in your bank account. You would be wise to choose a refinancing program offered by a renowned organization. More often than not, these programs are safer and have very low chances of fraudulent activities. It will keep your money safe and make sure that you are involving your money at the right place instead of someplace where there is too much vagueness or uncertainty.
Bait and Switch Frauds are More Common than You Would Imagine
In case you did not know, bait and switch frauds are considered to be one of the oldest tricks in the scam book. As we have discussed countless times in this article, scammers have become more sophisticated than ever before. They have been able to come up with schemes that make them seem like the real deal. It is a whole new level to fraudulent activities that was hard to imagine back in the day. Now, a lot of scammers mask themselves as lenders. They learn all the right words and terminologies to seem legitimate. Plus, their smooth talking skills know no bounds. Just a couple of sentences are all they need to charm unsuspecting people to fall into their bait and switch scams.
In a lot of these cases, the offers these fraudsters provide are too good to be true, which is what a lot of people are looking for surprisingly. Since the predicament they are in is quite tough, they are willing to welcome every opportunity that could get them out of financial trouble. Some of these offers provide people lower monthly payments and enticing interest rates. They find it really hard to turn these offers down, and often end up accepting them. The scammer who is making the offer does all his or her homework on order to structure the loan. Their goal is to make sure that it looks as legitimate as possible. Once a person buys into the deal, things seem to go smoothly; however, it is near the end when most people realize that they have been played for a fool. Unfortunately however, it is too late to reverse the damage at this point of the scam, which is why it is vitally important to stay vigilant from the start. In most cases, the scammer plays the classic bait and switch by surprising the homeowners with a completely new loan structure that has several costs and expensive fees associated with it.
You may be surprised to find out that a large amount of people end up falling for these expensive loans. Bait and switch scams are very hard to detect even for some experts. The reason behind this is simple. The bait seems too good to ignore. People buy into it hook, line, and sinker. However, the switch is where their world falls apart as they are bombarded with high fees, leaving them no other option but to pay what they initially promised to. There have been a lot of cases where people did not even know that they were scammed. It is only several years later when these people found out that they were ripped off. This is why it is really important for you to understand the basics of how refinancing works. Sure it will require you to dedicate a fair amount of time for it. But at the end of the day, you will greatly benefit from it, and perhaps help others to avoid these kinds of bait and switch scams as well.
Be Aware of all the Common Scams
While this is an obvious thing that everybody should be doing, very few people take this advice seriously. They think that spotting a scam is easy and they will immediately know if someone is trying to rip them of. In reality however, things are quite different. Most people think that they have got it all together and they know everything there is to know. This is where a fraud scheme creeps up on them without them even finding out. Therefore, no matter how much knowledge you have, you can always learn more. Fraudsters are coming up with new refinancing schemes every single day, which is why it is important that you stay two steps ahead of them in order to predict their moves and evade their traps miles before you come close to them.
So, whenever you get a call with someone offering you a tempting refinance, chances are that it is a scam. A clear telltale sign of this is that the caller will ask you’re your personal information in your first conversation. Sure, they will tell you that the information that you are providing will be for a specific service; however, in reality they will be taking it to scam you. Therefore, it would be in your best interest to act suspicious from the get go. It will throw the scammers off their game and possibly cause them to retreat. If caught, people who create refinancing scams can face several years in prison. They could also be asked to pay an unusually high amount of money for their crime. This is why, whenever they sense that the person that they are talking to knows a thing or two about refinancing, they tend to back out of the conversation.
The only downside of staying on guard at all times is that there will be times when you will receive authentic calls and letters by genuine people. It could create a bad impression on them and make them feel like you are an unpleasant person. But this is a risk that you should be willing to take if you want to prevent yourself from becoming part of a finance scam.
What is the Usual Pitch of Refinancing Scammers?
Refinancing scammers can approach you in a variety of different ways. Usually, they will get in touch with you through call. They might seem like the most present people on earth, which is an immediate red flag. The first thing that will come out of their mouth when they are offering you the refinancing deal is low-interest rates. If you are in a desperate situation, you might be tempted to pursue these offers, but it would be in your best interest not to do so. It could end up costing you a considerable amount of money. Instead, the first thing that you should do is politely turn them down. If the person that is approaching you is legitimate, he or she will respect you decision and bid you farewell. They might try to convince you but it won’t be on that same call. Most probably, they will call you back after a couple of days.
Scammers however, no matter how good they are, tend to often be impatient. They will become quite persistent if you decline their offer. Instead of calling you back at a later time, they will try to talk you into choosing the deal that they are offering .They might even try and modify the deal that they are offering, something which a well-respected, and more importantly, legitimate refinancing provider will never do. Make sure that you keep your cool during this conversation. You also have the option of hanging up on them. It is an easy and quick solution that works out most of the time. Screen the number that the potential scammer called you with. It will help you to identify them whenever they call you at a later date.
Avoid Paying Fees Upfront
One of the easiest ways to identify a finance scam is by checking if it requires you to pay fees upfront. If it does, chances are that somebody is trying to rip you off. Also, the fee that they will be asking from you will be quite high. If you confront them about the high fees, they will tell you that it is because of their excellent success rate. Never buy rebuttals like these. Instead, it would be best to dismiss these offer providers politely. Paying fees upfront will only cause you to lose a considerable amount of money and conclude the scam before it even happens.
Scammers, who tend to be successful in convincing people to withdraw massive sums of money, often ask you to submit the money to an overseas account. Once again, this is a massive red flag. Once you make the payment and it reaches their account, they will disappear with your money in an instant and tracking them down will prove to be futile. Also, it is important to know that it is not legal for services to request fees before providing their results. It can put them in a great deal of trouble. An authentic service will never ask you to dish out your money in the beginning. Instead, they will only ask for the fees once everything is done with.
Other than the scenarios and the various telltale signs that we have discussed in this article, you should also be on the lookout for spam emails. Scammers often send authentic looking emails which later on turn out to be an attempt to take other’s money by offering them refinancing packages with low rates. Be vary of these traps and you will be able to successfully avoid all types of refinancing scams out there.
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