Do you have equity in your Bethesda home but also have bills to pay? Are you thinking about refinancing to get cash for a needed item or service? Anyone who answers yes to either or both of these questions is a potential target for the latest mortgage scam: loan flipping.
How do you know the real lender from the scam artist? According to HouseLogic.com, these scammers prey on your financial anxiety and count on your not knowing their game. They'll start with a phone call, posing as a legitimate lender, and ask if you want to refinance your mortgage and get cash back. But where a legitimate lender would stop there, the scammers keep up the smooth talk. They'll entice you to take another loan (or two, or three) for that long-awaited vacation or the boat you thought you could never afford. They make you confuse your needs with your wants.
If you get caught up in all the great "stuff" you'll get, the con artists figure you won't realize how much you'll actually have to pay back or won't notice the outrageous fees they're charging you-about 3 to 6 percent more than a legitimate lender.
Once you've squeezed every last penny out of the refinance, the scammers will skip town with all that money you paid them in fees and prepayment penalties. You'll be left with repayments you can't afford that may ultimately cost you your home.
Being aware of the scam is only half of the equation. You also need to know how to protect yourself from a loan flipper.
- Deal only with lenders you know well or who have been recommended to you by someone you trust. Don't sign with someone who tries to smooth-talk you into an equity loan.
- Question every fee in a refinance, and ask about anything you don't understand. If you keep getting vague answers, find the door.
- Don't close until and unless you're completely comfortable and clear on the details.
- Check that the lender belongs to a group that promotes ethical practices, such as the Mortgage Bankers Association or the National Association of Mortgage Brokers.
Remember that a refinance isn't supposed to leave you broke. It's meant to tap the equity in your home for those legitimate things you need like a new roof or college tuition. Work with a legitimate lender and make sure that repaying the new loan is within your current means. Anything else is a scam.
Contact me, Mynor Herrera, today for expert help buying or selling in the DC, MD, & VA areas! I also specialize in Bethesda and Chevy Chase, as well as the sub-divisions of Rosemary Hills, Rock Creek Forest, East Bethesda & Whitehall Condominium.