Fraud Alert - A Few Things to Watch Out For When Refinancing your Mortgage

With the recent economic meltdown, millions of people become victims of financial instability across the globe. People have been literally forced into debts and their financial lives have got stuck in the debt mire. Mortgage refinancing can save you from this danger. However, people who are carrying outstanding debt balance, their thought process often get paralyzed and desperation overrides good judgment. As a result, mortgage refinancing scams often take advantage of their desperate situation and put them into further debts. You must have heard the question "mortgage how much can I borrow", well, it is the most crucial question in the current scenario and you should be ready with the answer of this question in order to prevent yourself from mortgage refinancing scams. As, most mortgage refinancing scams are linked with home equity if you don’t pay enough attention to the refinancing procedure of mortgage you might run the risk of loosing your home in future. Read on to know about the most common mortgage refinancing scams and stay away from them in future.

Loan Application

• Mortgage refinancing scammers usually target consumers who have low incomes or bad credit rating or who rushes into signing the mortgage deal without being aware of its consequences. The most common mortgage refinancing scam comes through the application form you send in to a mortgage company. Sometimes, you are encouraged by the refinancing company to write down higher incomes than what you actually make, in order to get the loan amount sanctioned. Such unethical practice can lead you to loose your home because you won’t able to afford the high monthly charges on a month to month basis. As you have declared a higher income amount, you might have to pay different loan amount and rates based on what you declared. Remember, if you put on paper something that you do not really have, it is you who will end up paying for it as the application form does not count. 

Balloon Payment

• Another notorious mortgage refinancing scam is associated with the balloon payment. These Loans are used when an individual is no longer able to pay a mortgage. When you face a mortgage foreclosure you no longer think prudently and a scam lender take advantage of this to make his way to profits. He pretend to be compassionate individual offering mortgage refinancing and lower monthly payments to save you from foreclosure but the actual story is quite different. All you repay each month is the interest fee only and the principal amount is in store which you remain obligated to pay at the end of the loan term. It is referred to as a balloon payment and such refinancing scam is pretty hard to spot. If you fail to pay this amount within a stipulated period of time, you end up losing your home.

Many individuals are there who have been hit by mortgage refinancing scams. Stay alert, go through the mortgage deal thoroughly before signing it and evade falling into such scam traps in future.