Home Refinance Loan - Home Refinance Loan Segment

Don't Miss These Signs of a Scam

Although it can be complicated for some of us, refinancing your home mortgage has the potential to save you a lot of money, especially if your existing interest rate is higher than what banks and other mortgage lenders are currently advertising. However, it is important to know that the mortgage industry isn't immune to scammers out to make a profit. Knowledge is the best defense against shady lending practices. Here are some signs to look out for:

1. Failure to disclose rates, terms, or closing costs. Be cautious when a lender refuses or puts off your request for pertinent information. You also have a right to know how long the rates are good for before they're subject to re-evaluation.
2. Requests that you sign false and/or blank loan forms. If you knowingly provide false information, you may risk legal problems. Also, if the loan officer encourages you to inflate your income, find a different lender. By signing blank forms, the lender can write in information at their will, potentially drawing up a loan with terms that can put you at risk-even taking your home away.
3. "Guarantee" a certain rate before formally applying. No one can legitimately guarantee a rate without having a completed application and looking at your credit report.
4. Door to door solicitation. A huge red flag should go up if someone knocks on your door to get you to borrow money. Legitimate lenders don't operate this way.
5. Offers debt consolidation. If you have a lot of debt, an unscrupulous lender may try to talk you into refinancing by offering to consolidate all your debts into one mortgage. This will probably hike up your monthly payment and unnecessarily put you at risk of losing your home.
6. Pushes you into a high monthly payment. As a rule, lenders like it when you borrower more in order to increase their profits, but legitimate lenders won't push you to the brink of foreclosure. Review your budget to figure out if you can afford the monthly payment and have money left over for all your other expenses.
7. Excessive interest rates, high broker's fees, and other excessive loan fees. If you have to pay thousands of dollars in points and many other fees, the loan is probably not in your best interest. Even worse, if you're pressured to pay some fees during the application process, beware.
8. Prevent you from reviewing closing documents in advance. If the lender doesn't provide you with copies of the closing documents so you can look them over and ask questions, find a new lender.
9. Failure to provide a Good Faith Estimate. This is required in the United States and should include an itemized list of fees and costs associated with your loan and must be provided within three business days of applying for a loan. It's a standard form intended to help the borrower compare different offers from other lenders or brokers.

Home Refinance Loan

Be careful or you can end up paying more than what you need to or worse, more than what you can afford, ultimately putting your home at risk. Don't be shy about asking questions or backing out of a deal if you feel uncomfortable or unsure of what the terms are.