The prospect of refinancing a home provides owners with a means of achieving economic stability and freedom from excessive mortgage rates. Learning how to avoid and identify mortgage fraud can protect you and your home. Homeowners that take the necessary precautions can reduce the impending risks of mortgage fraud, while generating a desired level of economic freedom that might have previously been unavailable.
Refinancing refers to the replacement of a debt obligation with a similar debt obligation under restructured terms. This process, however, makes the management of said debt much easier, as homeowners are able use smaller increments to pay off their mortgage over and extended period of time. Homeowners may restructure their mortgage for the following reasons:
- Receive a better interest rate.
- As a means to consolidate current debt under one loan which has a potentially longer/shorter term contingent on interest rate differential and fees.
- To lower the monthly payment amount
- As a means to mitigate or reduce risk
- To increase access to newly available funds
Protecting yourself from mortgage fraud
Fortunately there are ways you can protect yourself from this type of fraud.
- Make sure you get referrals for real estate and mortgage professionals from trusted friends and family.
- Find out what other homes in the area have sold, and compare them to the property you are looking at as well as tax assessments to verify the property’s actual value.
- Make sure you understand everything you are signing. Don’t sign anything you aren’t comfortable with. If there is something you don’t understand, consult your attorney. Also watch out for documents with blank spaces, as these can be fraudulent.
- Review all the loan documents to ensure all the information–even including your name–is accurate and true.
- Check the title history to find out how often the property has been sold and re-sold. It could be an indication the property’s value has been falsely inflated and the property illegally flipped.
- Don’t be pressured into borrowing more than you can afford to repay.
- Don’t be talked into inflating numbers or giving false information. Stick to the truth at all times.