8 Ways to Identify a Mortgage Scam and Protect Yourself

8 Ways to Identify a Mortgage Scam and Protect Yourself

Getting that key to your dream home is like catching a glimpse of a shooting star – it is thrilling! But wait, the galaxy of the mortgage world has its share of tricky comets as well. These shady mortgage scams can transform your dream into a haunting nightmare, causing not just financial losses but the unthinkable – losing your home. Fear not, we are here to protect you from falling for these schemes and to keep your treasure trove safe.

Here are 8 tips to help you avoid falling victim to a scam:

1. Avoid Offers that are "Too Good to be True"

If it feels like you’re being offered something for nothing, beware! Like a mirage in the desert, these too-good-to-be-true offers can disappear when you get a closer look. A scammer might promise you the moon and stars, but once you’ve signed on, they'll unleash their bag of tricks – hidden fees, snooping for your private info, and other devious moves. Legit lenders play by the rules, not the tricks. So, when it sounds too amazing to be real, it probably is! Be careful, proceed with caution.

2. Avoid Paying Upfront Fees

Legitimate mortgage lenders usually don't ask for upfront fees before processing your application. Some legitimate lenders do ask you to pay for a credit report fee and appraisal upfront to show that you're serious - but most do not. If someone demands payment before you've even been approved, it's a major red flag. Scammers might take your money and disappear, leaving you in a worse situation.

3. Resist Pressure Tactics

Scammers may try to rush you into making a decision, saying you have a limited time to secure a great deal. Legitimate lenders won't pressure you into signing something without giving you ample time to review and understand the terms.

4. Watch for Identity Theft Warning Signs

If a lender asks for personal information like your Social Security number, bank account details, or credit card information early in the process, be cautious. Identity theft is a common goal for scammers. Make sure you're dealing with a reputable lender before sharing sensitive information.

5. Expect Clear Communication

Watch out for lenders who avoid answering your questions directly or use confusing jargon. Legitimate lenders are transparent and willing to explain every step of the process in terms you can understand.

6. Always Keep a Paper Trail

A legitimate mortgage involves paperwork – contracts, disclosures, and more. If a lender tries to skip the paperwork or makes excuses for not providing it, it's a red flag. Always demand proper documentation before proceeding.

7. Avoid Unregistered or Unlicensed Lenders

Legitimate mortgage lenders are registered or licensed to operate in your state. Before moving forward, verify their credentials with your state's licensing agency. Scammers often try to operate under the radar to avoid detection.

8. Trust Your Instincts

Above all, trust your gut. If something feels off, it probably is. Don't hesitate to walk away from a deal that makes you uncomfortable.

To avoid becoming the victim of a scam: stay vigilant, do your research, and follow the tips above.

If you have any questions or are in the market for a mortgage loan, please give us a call today!