Unfortunately, today mortgage refinance scams happen all of the time. Predators prey on people who they know are in a desperate situation. They have many creative ways to get to you, whether over the phone, in the mail or with a flyer. Once they have your attention, they obtain your personal information and the rest is history. These scammers often provide deals that are too good to be true. These deals end up hurting you the most. Here are some simple ways to avoid this from happening to you.
The first step is to educate yourself. Learn about the various scams out there. Second, never willingly provide your personal information to someone who approaches you. This is the most common scenario. A person who claims to be a loan officer approaches you with a rock-bottom interest rate. You get excited and start rattling off your information in order to get the application going. Unfortunately, the application goes nowhere and your personal information ends up in the black market for someone to use. In order to prepare yourself, watch the news, read stories on the internet, and talk to others to see what mortgage scams occur.
Be Wary of Refinance Letters
It is common to get targeted advertisements in the mail, but they are not always legitimate. This is especially true with refinancing offers. It is very unlikely that your bank will approach you and ask you to refinance. However, mortgage scammers make it look as if the bank did just that. The official looking letter promises to save you thousands of dollars – all you have to do is call the number and provide your information. In reality, you usually have to approach your lender to inquire about refinancing, so be wary of these letters.
Don’t Provide Personal Information Right Away
If you do end up talking to someone who sent you a letter or called you, avoid providing any information. Wait until you get full information from them before you provide your information. You can ask specific questions about the institution, including their Better Business Bureau rating. You can also ask how they got your name and mortgage information and for references of people they helped before. This usually sends the scammer running because they cannot provide you with either type of proof. The general rule is unless you contacted the company, you should never willingly provide your personal information.
Don’t Pay Money Upfront
Some mortgage refinance scams require you to wire money to the lender upfront. They tell you they will not talk to you until you pay the fee. This is a red flag – don’t do it. The scammer will tell you they cannot lock in your interest rate or discuss any details with you until you send the money. All this means is the “lender” will take your money and run. You will never hear from him again. If you do, it is because he stole your identity or your credit card number if you used it to pay the fee.
Watch Emails Carefully
Many mortgage refinance scams occur over email too. This is a great way to grab the audience’s attention and it can address thousands of people at once. The scammers count on the fact that someone will fall for the scam out of the thousands. Rather than responding to an email that offers a great deal, inspect it for the following:
- Check the spelling – Oftentimes the scammer will try to make the email look as if it came from your lender, but will misspell obvious words or even the bank’s name
- Evaluate the web address – The link the scammer includes in the email is usually not the official website; it goes to a phishing site which tries to get your information. Don’t click on it, but read the address to see if it is the same as your lender’s address
- Contact your lender – Calling your lender to inquire about the email is the best way to go. This way you know whether they send you the offer.
Get Your Own Information
The best way to avoid mortgage refinance scams is to initiate a refinance yourself. Do not let someone else pressure you into applying for a mortgage. If you decide you are ready to refinance, you seek out the lenders. This way when you call them, you know who receives your personal information. When you blindly provide information to someone that contacts you, it could be anyone on the other end of the line. If you do your own research, you will know which banks to avoid.
Avoiding mortgage refinance scams is a very serious issue today. With the downfall of the housing industry and the start of HARP, scammers have had an easier time taking advantage of people. If something seems off about someone contacting you about refinancing, don’t do it. Instead, contact your lender to see what options you have to refinance. If you find out a program was a scam after you provide your name, address, and social security number can be too late. By this point, the scammer either uses your information or sells it on the black market. You are then left to handle the mess, which can take years. This just goes to show that you cannot be too careful!