Buying a home, just like any other transaction has the possiblity of attracting some nefarious swindlers who want to take your money and run. They take many guises, and exist in nearly every walk of life. These unscrupulous companies or individuals don’t care about your race, your nationality, or even what car you drive. The reason they are chatting to you is to relieve you of your money, and quite possibly your home as well. Here are some of the most common home equity scams you might come across.
The loan flipping scam
This scam can seem quite good in the beginning. The person calls you up, excited about the most recent deal, telling you that refinancing right now is the best possible option. Then a short while later, he contacts you again with even better interest rates for your loan. The thing is, in addition to getting more money out to spend, you’re also paying additional fees, interest rates, and increasing your overall debt. These types of deals always seem to sour in the end.
The Insurance Packing Method
Insurance packing occurs when the mortgage broker insists on adding on trival and unneeded insurance items, like credit insurance. The items they insist on rarely offer any good protection, and only lighten your wallet. The mortgage broker will most likely tell exceptional stories of some outrageous scene happening, insisting that it could happen to you. The best defense against this scheme is to think rationally about the possibility of something happening versus increasing the mortgage brokers income.
Bait and Switch
If you’re selling Montana real estate, Colorado real estate, or somewhere else, it’s pretty much always the same:This scam is often used on first time home buyers, or senior citizens on a fixed income. It begins innocently enough, where the dishonest lender will present an offer that seems just too good to be true, and too tempting to pass up. The end is marked by drastic changes to the deal brought on at a rapid pace. First it’s a little item here, a change in the dollar amount there, and soon what was a exceptional offer is transformed into a confusing mess. Then the buyer is pressured into signing onto something that wasn’t what they intended, or what they could afford. The schemes presented here are the most popular, but by no means are the only ones you’ll come across while buying a new dream home.. By comprehending how these scams work, you’ll be better prepared to protect yourself when the need arises.e}