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The Best Ways to Avoid Mortgage Lending Scams

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By : Roby Hicks    99 or more times read
Unfortunately, most of us cannot avoid the need to take out a mortgage when buying a home. But if you must do that, then you should take certain steps to avoid possible lending scams. Here are some tips to help accomplish that goal:

  1. Question all up-front payments

    One of the ploys of mortgage company scam artists is to request unnecessary payments. Some examples are those for changing delinquent loans, or for different types of mortgage counseling. Most payments should be due after you have officially taken out a mortgage. So if a company asks for them earlier, you should definitely be very cautious.

  2. Be careful about particular types of guarantees

    That includes those about modifications to your mortgage, or halting a foreclosure. It is possible that a company could fulfill its promises to accomplish those goals. However, there is always a chance that it would not be able to, so it should not make such guarantees.

  3. Understand a document before signing it

    It is quite normal for new homeowners not to understand fully certain documents that mortgage companies ask them to sign, Still, you should never sign such documents until you comprehend 100% of the information within them. To avoid potentially pitfalls, you should ask the mortgage company (and possibly a third party) to explain any items on the documents that you do not comprehend fully.

  4. Look for online mortgage companies with enough contact information

    As a general rule, varied types of contact information indicate that a mortgage company will be less likely to be a fraudster. You should be cautious about companies that do not provide a landline telephone number and offline address on their websites. Additionally, even if a company provides such information you should verify it.

  5. Secure professional and personal referrals

    Getting referrals is certainly one of the best steps to take, in order to avoid being a victim. That is because we usually trust advice that we get from trained professionals, and friends or relatives. While there is still a chance that a mortgage company could take advantage of you, the likelihood will be less.

  6. Share personal information cautiously

    If you choose a certain mortgage company, then you will need to do that. However, be careful about companies that request personal information very early in the process of securing a mortgage. There is a chance that the company could be a fraudster.

  7. Be careful about newer mortgage companies

    Does this mean that old and established companies will always be trustworthy? No, but the odds will be more likely. Older companies have become established. Typically that means that they have been in existence long enough to have been caught as a scam artist. However, that is not guaranteed, so you should be cautious about both new and old companies.

  8. Research about complaints

    The Better Business Bureau and other similar organizations keep records of complaints against various businesses, including those in the mortgage industry. It would be reasonable if a company had one or two complaints filed against it. However, when half or most of its customers have complained, that is a red flag that you should definitely consider.

The above tips will help to minimize the chance of falling prey to a scam artist.
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