Current Scams to Beware of When Shopping Around for a Mortgage Loan
Posted by David Schneider | November 19, 2007

When you first applied for a mortgage loan, how well did you trust the loan officers and lending companies? The biggest fear most people have when shopping around for a mortgage loan is getting scammed. Not surprising are scams that rush the closing of the mortgage loan, requiring credit insurance and even signing away your deed. Not only are these scams for someone shopping for a mortgage loan, but they can also be a warning for anyone who has a mortgage loan and may be looking to refinance. In order to protect yourself from being scammed, you should first understand what to look for and how each one works.

Mortgage Loan Closing Race

Appropriately enough you could also call this type of scam, “Hurrying you along so you don’t read the fine print of the larger scam.” That might sound like a mouthful, but in terms of a mortgage loan it could simply mean that you are rushed through the loan process so that loan officer can change the terms, change the APR or tack on more fees to the final paperwork. This mortgage loan scam can be done by reeling in your business with “limited time offers” on good rates or fees. In order to get those great deals, you must close by a certain date. The trick in this scam isn’t hard to pull off. Most people are so focused on getting the good deal in a short time period that they miss the fine print notifying them of changes or discrepancies that they otherwise wouldn’t have approved.

Scamming With Unnecessary Credit Insurance

In short, credit insurance is basically an extra fee written into the mortgage loan papers at the time of signing. You won’t ever see them while the mortgage loan is being written up and the loan officer probably won’t ever discuss them with you. This is becoming a very common scam, especially in the aftermath of the sub prime mortgage loan craze. If your loan officer does discuss it with you, the credit insurance may be pointed out as a benefit and way to protect you. Should you object to the credit insurance fee(s), you may be told that it could take days to rewrite the loan papers, the manager could reconsider the loan and even that you may not be able to get the loan at all without the credit insurance. This is especially true if you have less than perfect credit. Don’t be afraid to question the reason for the credit insurance.

Fudging the Numbers for a Mortgage Loan

Probably the worst of the scams you can be faced with when shopping for your mortgage loan is the loan officer who is more than willing to help you get the loan by “working the numbers” to your advantage. Presumably, anyone who is more than eager to get the mortgage loan for you by being untruthful on the loan papers is not only scamming you, but they are putting you at financial risk and they are being extremely unethical in their practices. The danger in working with this type of loan officer may get you in over your head and you could end up with a loan that can’t afford.

A reputable mortgage loan officer will not scam you. They will work with you in order to assure that not only are you given options to the best mortgage loans for you, but they will also help you find the best mortgage loan that works for your finances as well. The scams discussed here are not only common, but they are easily passed by thousands of people every day. Arm yourself with the information you need to spot a scam and you will be a smarter shopper and even smarter home owner when you do find the mortgage loan that is right for you.