Buying a new home should be a great experience. However, that experience can go bad pretty quickly if you aren’t careful, because there are plenty of scam artists who want to take advantage of homebuyers. Fret not, future homebuyer — most scams can be deterred with a little legwork and some vigilance. Below are a few tips to help protect you during the homebuying process.
Protect Your Identity
Last year, identity fraud affected 12.7 million Americans, according to Javelin Strategy & Research's Identity Fraud Study. The amount stolen: $16 billion. Real estate identity fraud is a relatively new crime, but buyers must keep this threat in mind. From pre-qualification to closing, the buying process requires you to divulge tons of personal information that, if in the wrong hands, could wreck your personal finances. Therefore, it is imperative to understand where your information is going and how it is being handled. If you don’t know, ask.
Consider subscribing to an identity theft protection service such as LifeLock before you begin your property search. The monitoring by and alerts from a professional identity theft protection service can stop identity thieves from doing too much damage. It’s a worthwhile preemptive strike that could save you time and money.
Beware of Fraudulent Realtors
A few years ago, an unlicensed real estate brokerage company scammed Dallas-Fort Worth area residents out of thousands of dollars by “renting” or “selling” properties the fake brokerage company didn’t own or represent. While this type of scam has been identified throughout the U.S., you can sidestep victimization.
Check the credentials of real estate agents before you begin working with them. In Texas, buyers can obtain licensing information through the Texas Real Estate Commission Standards and Enforcement Services Division’s website. Also, a reputable real estate agent won’t mind providing references from former clients. Don’t be afraid to ask for them.
Most importantly, trust your gut. If something doesn’t feel right, it probably isn’t.
Lookout for Mortgage Fraud Schemes
The FBI defines mortgage fraud as a crime marked by a misrepresentation or omission on a loan. While mortgage fraud comes in many different packages, buyers should be particularly alert for lease/buy-back mortgage scams, no money down loans, bait-and-switch schemes and anything else that sounds to good to be true.
Mortgage schemes are usually perpetuated by unscrupulous mortgage brokers and buyers who lie on their loan applications. Working with reputable professionals and being honest on your loan application are the best ways to avoid these schemes. Shop around for the mortgage broker, and then do your due diligence.
Consult an Unbiased Professional
Find a real estate lawyer, knowledgeable friend or a U.S. Dept. of Housing & Urban Development-approved counselor(which may be free) to help you on your home-buying journey. These professionals should be able to steer you away from any problems, which will allow you to focus on the task at hand: buying a house.
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