While you must avoid any finance scam that comes your way, the one you want to stay miles away from is the mortgage scam. It is the worst form of a scam that leaves a dent in your finances so huge that you can’t recover from it. What’s worse is that you are likely to fall for this scam because it is extremely sophisticated and built upon your desire to have your own house. The wish to have your own home can blind you at times, like it does millions of people around the world. Some are patient, and but some fall for scams and lose all that they have gathered to have a roof on their heads.
Here are most dangerous mortgage scams that you should stay away from. Once you know about them, you can avoid them and keep your hard-earned money safe.
1. Lender Inflating Your Income
This is a finance scam that looks like a divine help when you first look at it. The lender is willing to help you get a huge loan. How do they do that? Well, they simply increase the amount of money you are making every month. What happens when they increase the amount of money you make monthly? You get a bigger loan because now you seem to be the person who can easily repay the loan. A lender will always see how easy it is for you to repay the loan. The smaller your income and great your expenses, the more difficult it is for you to repay the loan. But when they increase your income artificially, you get a loan amount that you can’t repay.
Another way this fraud works is by increasing the value of the home artificially. Since the home has a high value, you get a bigger loan. Again, who is going to pay for the house? You! If you fall for this scam, you end up paying thousands of additional dollars in interest than you should have.
2. Accepting Application Despite Poor Credit
This is an obvious finance scam that you should avoid at any cost. You have hundreds and thousands of scams on the internet that tell you that you can get a loan no matter how bad your credit rating or score is. Some companies make this claim only to attract more potential customers. When you land on their website, they define a lot of terms and conditions, which prove that you still can’t get the loan unless you are financially fit, or in other words, you have a good credit score. However, you must avoid an online website that tells you clearly that you can get a loan despite your poor credit score. You are about to fall into a pit that never lets you come out.
3. Penalizing You for Doing Good
So, the lender has given you a huge amount that you can use to buy the house. Now, the lender has some terms and conditions in place to make sure that you return the amount. But what if you want to prepay your loan? Your lender should be greatly happy about it right? Well, no! That does not happen when you are working with a scam. In fact, quite the opposite will happen when you have obtained your mortgage from a scam institution. They will not let you prepay any of the amount that you owe. On the contrary, they are going to charge you a penalty amount for prepaying. That’s just dishonest.
4. Forcing You to Buy the House
This is the type of force that you are going to love, like you love the magician forcing the card on you because you want to be surprised at the end of the magic trick. Unfortunately, this trick ends with you being in pain. A lender can force the house on you by not asking you the right questions and properly qualifying you for the house. If it seems that your lender is extremely inquisitive about your salary, income, and expenses, you should be happy about it. If the lender does not ask you these questions, it is not a lender. It is a scammer that will make you get the loan and then will keep you repaying for your life.
Usually, you will see that the lender wants your home mortgage payment to be around 25% of the gross income you make every month. Any mortgage payment more than that means you will not be able to afford the house.
5. The Helping Hand Scam
This finance scam comes in the form of help from the angels. Yes, so someone is going to call you and then tell you some basic information about your mortgage loan condition. They will make you say that you are having a hard time repaying your mortgage loan because the amount is too big and your monthly income is not enough. They will then tell you the most beautiful words that your ears have been waiting to hear, “We can renegotiate your terms and monthly amount with your lender on your behalf.”
You like the sound of those words but what you don’t realize is that they are the sirens of an imminent danger. Of course, they are going to tell you their fee for settling the matters with your lender. You just pay them their fee and they will disappear forever. If you are gullible enough for them, they will make you pay multiple times before their ghostly (because they don’t exist) services disappear in thin air.
Getting a house is undoubtedly a matter of emotions as much as it is a matter of finances. However, online mortgage scams will play with both of them for their personal gains. Sometimes, they will trap you by offering you a mortgage loan that apparently makes your life easier. At other times, they will come in the form of a service that can help you renegotiate your mortgage terms to make things easier. However, they are nothing but scams, and they intend harm to you. Make sure you stay away from anything that sounds too good to be true. When your mortgage loan procedure is difficult and annoying, that’s when it is supposedly real and authentic as well.