How to identify and avoid mortgage scams?
To know how to avoid mortgage scams, one must first understand what a mortgage loan is. A mortgage loan is used by purchasers of real property to raise capital to buy real estate; or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged.
There are different types of mortgage loans which can be characterized into :
On behalf of an individual or business, a mortgage broker acts an intermediary who brokers the loan.
Mortgage brokers have the following duties to perform –
1. Marketing to attract clients
2. Assessment of the borrower's circumstances
3. Assessing the market to find a mortgage product that fits the client's needs.
4. Applying for a lenders agreement in principle.
5. Gathering all needed documents.
6. Completing a lender application form.
7. Explaining the legal disclosures.
8. Submitting all material to the lender.
9. Upholding their duty by saving their clients as much money as possible by offering best advice for the clients circumstances.
Residential property in Mumbai is legendary. There is always a high demand to buy property in Mumbai. Group Integrated is one of the most reputed builders in Mumbai. We have built projects in different suburbs of Mumbai that have been considered as benchmarks in that area and era. The apartments at Integrated are built with great precision and style. We follow a zero wastage policy in all our projects. By zero wastage policy we mean planning life spaces in such a manner that no space gets wasted.
Group Integrated have been enhancing the residential properties in Mumbai for over a long period now. Mortgage brokers can help you get a space. A certain mortgage loan interest rate is to be paid. An interest rate is the rate at which interest is paid by borrowers (debtors) for the use of money that they borrow from lenders (creditors).
Mortgage loan interest rates are of two types. They are –
A "vanilla wafer" mortgage loan, is a fully amortizing mortgage loan where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or "float".
When taking a mortgage loan, a certain amount of mortgage insurance has to be paid. Mortgage insurance is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. It can be public or private depending on the insurer.
When buying a property through a mortgage broker, one must be careful and should avoid any type of mortgage scam. The first step in avoiding a mortgage scam is to identify it. Here are a few mortgage scams that are easily identifiable.
1. A theft in – “deed” : Also known as bait and switch, this mortgage scam is specially a threat for borrowers who can't read English well. One must read the deed thoroughly before signing it.
2. Phantom of the loan mod : Never pay upfront fees for a loan modification. Homeowners have been warned about this repeatedly through numerous education campaigns.
3. Mortgage has been sold – NOT : Banks often buy and sell residential mortgages, and con artists take advantage of that. They create fake companies, pretend they are the new owners of your loan and take your payments until you figure out it's a scam.
4. Steer clear of reverse mortgage scams : Reverse mortgages allow homeowners who are 62 or older to borrow against the equity in their homes without having to make monthly mortgage payments. Normally, the scammer wants to steal the equity in the home or use the senior citizens as straw buyers and borrowers.
5. Avoid lease/buy-back agreements : In lease/buy-back mortgage scams, the perpetrator promises the deed transfer is temporary and you'll be able to rent the home from the new owners and eventually repurchase the home after you get back on your feet.
These are the main 5 mortgage loan scams that take place everywhere. When you are taking a home mortgage loan you must be very alert and careful not to fall into the trap of con artists. To help you avoid such scams here are a few tips :
Do not pay for help
Don't transfer the property deed
Ignore promises of shortcuts
To avoid mortgage scams, a good way is to educate people about mortgage scams. When you know more about mortgate loans, mortgage insurance and everything related to mortgage, it makes it difficult for the scammers to scam you easily. Also when you identify the scam fast, it will be easier for you to get out of it!