Mortgage fraud is something that costs between $4 and $6 billion each year in the United States. With the vulnerability of the mortgage market and the potential homebuyers looking for ways to circumvent the lengthy and cumbersome home loan process, mortgage fraud cases are on the rise. Here are some tips to help you stay safe during this time and avoid getting taken advantage of by some unscrupulous companies and individuals.
Know What You are Signing
Many cases of mortgage fraud are the result of the victim not reading the documents that they are signing. Reputable lenders and mortgage companies will typically not put stipulations in documents and contracts that are fraudulent or against the general rules of mortgage borrowing, but less reputable individuals and companies may do that. Never sign anything without first reading it and understanding it.
Never Lend Your Identity to Someone
Some mortgage fraudsters will try to convince you to loan your identity, including your Social Security number, to them for a short time so they can sign papers on your behalf or agree to deals for you. This is never a good idea and it can only end in some type of fraud. Depending on the person or company, it could also rob you of your life savings.
Get Independent Evaluations
Many home buyers make the mistake of trusting the seller. This is a big mistake. Regardless of how trustworthy or honest the seller seems, it is always best to hire your own company or private individual to do an evaluation of the home and the terms of the mortgage loan. If the seller is honest, they should have no problem with your getting an outside evaluation.
Hire Your Own Appraiser
In addition to getting an evaluation of the mortgage terms and the home inspection, hiring your own appraiser is also ideal. The seller’s appraiser could inflate the price of the home because they will be working on the seller’s behalf. You need someone looking out for your best interests and hiring your own appraiser to evaluate the value of the home is one way to make that happen.
Make Sure Your Deposit is Secure
Never just give your deposit to a seller or seller’s agent and hope it will be safe. There can be misunderstandings and other problems when you do this. Instead, put your deposit in an escrow account or some other safe account so it will be there and available as soon as the deal is ready to close.
Buy Title Insurance
Title insurance protects you in case there is a lien on the title that does not show up during the purchasing process. If there is a lien on the title after you move in, there is a chance you could be removed from the home or you could be responsible for paying off the lien. Title insurance is a great way to protect your investment so always factor in the price of this commodity when buying a new home.
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