Buying your own property is one of the most exciting things you can do. It gives you the freedom you’ve always wanted, and provides a financial safety net for your future. Perhaps you already own your own home, but want to invest in more property to let out to tenants? It can be a lucrative source of income.
There’s never been a better time to buy real estate, but to get it you’re going to need to take a mortgage. There are some good deals to be had, but are some of them too good to be true? Too many property buyers are falling victim to property fraud. It can deplete your money now, and have a major impact on your future credit rating. Here are some facts about mortgage fraud, along with steps you can take to stop it happening to you.
Why Mortgage Fraud Is On the Rise
In these difficult financial times, people are looking for alternative sources to fund their home purchases. Unfortunately, professional fraudsters are exploiting this for their own gains. A study by the FBI shows that in a four year period, the amount of mortgage fraud cases they investigated rose by 176%, and that could be just the tip of the iceberg.
What are the Consequences of Mortgage Fraud?
If you become the victim of mortgage fraud it can have a devastating effect on your financial security now, and on your ability to obtain credit in the future. You may find that there are hidden debts that come with the home that you just purchased, or that the amount that you are expected to pay back is much higher than you expected. This can lead to foreclosure, where you lose your home as well as your money.
Another scam that mortgage fraudsters are happy to use is identity theft. They take the personal and financial details that you supply, and use it to open credit lines in your name which are then emptied. By the time you find out, the damage is done.
If you have to foreclose on a loan, or if fraudulent credit is taken using your details, your credit score will plummet. When you have a poor credit score, you may find it impossible to obtain loans, future mortgages, or even store cards.
How to Avoid Mortgage Fraud
Now you’ve seen the devastating consequences that mortgage fraud can bring, you need to know how to protect yourself from it. The most important thing to remember is that you can’t always trust your instincts. Experienced fraudsters know how to convey a professional image that will make them appear above suspicion. They’re experts at gaining the trust of honest people like you. Here are some steps that you should always take when applying for a mortgage:
- Check the credentials and licenses of realtors and mortgage professionals
- Be wary of ‘no deposit’ mortgages
- Find out what other homes in the neighbourhood are selling for
- Read all documents thoroughly, preferably with an attorney
- Never sign an incomplete document
- Never be talked into putting misleading information on your application
Following these steps may take you a little more time, but it can save you money today and in the future. Mortgage documents and application forms can seem confusing, that’s why it always pays to have an expert legal eye look them over.
Another potential scam to be aware of comes if you are in danger of foreclosure. You may be approached by a foreclosure assistance firm who say they can help you keep your home. Once again, make sure that you check their credentials thoroughly, or else you could find that they take your money and disappear.
By being vigilant, and checking both documentation and the licenses of everyone you deal with, you can protect you and your family from the effects of mortgage fraud.