Mortgage ripoffs haven’t ended just because the housing bust has. There are still plenty of unscrupulous mortgage brokers who prey on first-time homebuyers.
How can you get ripped off when buying your first home?
According to the U.S. Department of Housing and Urban Development (HUD), tactics scam artists use include:
- Using false appraisals to sell properties for more than they are worth
- Encouraging borrowers to lie about their income, expenses or cash available for down payments
- Lending more money than a borrower can afford to repay
- Charging high interest rates to borrowers based on their race or national origin and not on their credit history
- Charging fees for unnecessary or nonexistent products and services
- Pressuring borrowers to accept higher-risk loans such as balloon loans, interest-only payments and high prepayment penalties
- Presenting different costs or terms at closing than the ones initially presented to borrowers
- Leaving items blank in legal documents
How can you prevent mortgage ripoffs?
Luckily, HUD also has common-sense recommendations to prevent mortgage fraud.
- Attend a homeownership education course offered by a HUD-approved, nonprofit counseling agency.
- Select a real estate agent you can trust. If you don’t know someone local, ask a friend.
- Don’t let anyone convince you to borrow more money than you can repay. If you get behind on your payments, you may lose your house and all the money you put into your property.
- Never sign a blank document or a document containing blanks. Write “N/A” or cross through any blanks. If you don’t, you may still be legally bound by terms written in after you signed.
- Don’t pay too much for your home. Ask your realtor for a home comparison or go to the Mercer County Auditor’s property search site.
- Use a home inspector. If repairs must be made before the sale, document whether you or the seller must make the repairs.
- Ask questions if you don’t understand something. You can ask your realtor or your local banker. Don’t sign anything you don’t understand.
- Don’t let anyone persuade you to make a false statement on your loan application, such as overstating your income, understating your debts, or lying about the source of your down payment. Lying on a mortgage application is illegal.
What other actions should you take before taking out a mortgage loan?
Avoiding unscrupulous mortgage brokers is only part of the process of buying a home.
Your home is probably the biggest purchase—and perhaps the longest commitment—you will ever make. Do your homework.
Try these suggestions by Mercer Savings to make your home-buying process easier.
To learn more, and to find out why residents of Celina, Ft. Recovery, and Greenville have been choosing Mercer Savings Bank for mortgage loans for more than 125 years, contact us today.