If you are planning on purchasing a new home or even refinancing your home you may find all the options for financing confusing. Every year, misinformed homebuyers, often first-time purchasers or seniors, become victims of predatory lending or loan fraud. Even if you have been thru the loan process before it can be easy to fall victim to a loan scam. While most lenders are professional and legitimate, there are predatory lenders who are willing to take advantage if you are not a smart consumer.  Unfortunately with the current economomic status and the availability of loans more difficult, loan scams are on the rise.  Below are some tips to help you from being a victim.

Avoid Being A Victim

  • Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.
  • Avoid Unsolicited phone calls. Be wary of any phone call offering remarkably low interest rates on loans, especially if you have registered your phone number with the Do Not Call Registry. Most major nationwide lenders do not solicit business over the phone. Never give out personal information over the phone unless you are absolutely sure who you are speaking with.
  • Be informed. Research and get information about the prices of other homes in the neighborhood. Don't be fooled into paying too much.
  • Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.
  • Never sign a blank document or a document containing blanks. If information is inserted by someone else after you have signed, you may still be bound to the terms of the contract. Insert "N/A" (i.e., not applicable) or cross through any blanks. If the terms aren't what you'd agreed on, do not sign the document.
  • Avoid bad credit mortgage rates when looking for a loan.
  • Many loan scammers use high pressure sales tactics, so if you feel pressured or uncomfortable in anyway, never sign anything. It is a good idea to contact a real estate lawyer if in doubt to review the documents. If the company is legit, they should have no objection to a lawyer looking over the loan agreements before you will sign them.

Warning Signs

  • Do business with reputable companies, stay away from unsolicited calls, e-mails or letters offering you a loan.
  • Never do business with anyone who asks for money to be sent in advance to cover "processing", "application", "insurance", or the "first month's payment". Legitimate lenders never ask for these things to be paid before a loan is disbursed.
  • Requests that you "wire" or "send" money, as soon as possible to a large U.S. city or to another country, such as Canada, England, or Nigeria, by Western Union, Moneygram, or similar means.

What To Do If You Think You Have Been Scammed?

If you feel that you have been scammed or the company you have been in touch with is suspicious, contact the below agencies.

  • The FTC
  • The FBI
  • File fraud alerts with each of the three credit bureaus. This is important if you have provided the scammers with your sensitive information, such as your Social Security Number and information on your driver's license. They can use this to obtain credit in your name.

For more tips to help you be an educated consumer and to avoid loan scams, visit the US HUD website for more information