How to Beat Mortgage Fraud

For many people, the current housing market is the perfect time to buy. It may sound counterintuitive, but those extremely low interest rates during the height of the housing bubble actually caused the cost of real estate to be much higher than it was actually worth. Real estate appraisers were bringing in reports that appraised homes for upwards of $500,000 and more. Those same homes today are appraising for around $300,000, so you can see how much the times are a changing. That’s the good news; the bad news is that there is still a lot of mortgage fraud going on. So, if you are looking to get into the housing market, and you want to make sure you don’t get caught up with a shady mortgage lender, here are a few tips that may help.

 

Fraud in the mortgage industry has been in the news a lot since the crash of the housing market, and has caused many people who were thinking about getting into real estate to back off. One of the biggest problems is the fact that so much of the paperwork you have to sign in order to get a mortgage loan is filled with language that is difficult for the average person to understand. There’s also the fact that many mortgage lenders push a real estate appraiser of their choosing on their clients. Sadly, many of those appraisers were being coerced into bringing in the numbers the mortgage lender wanted, which contributed to the high prices in the housing market.

 

Fortunately, there are plenty of reputable real estate appraisers and mortgage lenders out there that will help you get into the housing market in a way that is best for all concerned, not just their bottom line. But it is still good to have some knowledge of your own, before you sign those papers. In fact as far as papers go, make sure you read the documents you are signing thoroughly.

 

You may think that’s an obvious piece of advice, but you would be surprised how many people rely on their mortgage lender to explain everything to them. While the lender should be there to help you understand all the legalities and professional jargon, it is really up to you, the buyer, to make sure you aren’t signing your life away. This may mean that you take longer to sign with the mortgage lender than they may like, but this is your home and it is your right to take as much time as you need to ensure you thoroughly understand every part of the contract. You may even want to hire your own real estate appraiser to make sure you are paying the fair market price for your home. You may even want to consult a HUD approved housing counselor who can help you look over the loan application.

 

Another biggie is making sure you are being completely honest with all the information you are providing on the mortgage loan application. It is considered fraud to provide false information on any contract, and it isn’t worth getting your real estate taken away, or worse. That’s another good way to gauge how good your mortgage lender is, because if they suggest you fudge anything, they are probably doing the same to you. If this happens, I suggest you find yourself another lender who specializes in getting people into the housing market.

 

You wouldn’t let an unlicensed doctor operate on you, nor should you be dealing with a mortgage lender, real estate appraiser or real estate agent who isn’t licensed.

Taking the time to review the background of your real estate agent and broker can prove to be invaluable. Make sure you do this before you ever provide any personal information or sign loan documents. Finding out if there is any pending litigation or complaints will help you decide if they are the best people to do business with.

 

One final tip; check out how much the mortgage broker you are dealing with is making off of your loan. Don’t’ worry about offending the lender; often times the paycheck they earn from your loan is dependent on the interest rate you get for it. You can see how this may influence the deal you are getting.

 

Buying a home is a huge investment and should not be taken lightly. Follow your gut, if something doesn’t feel right it probably isn’t. Find a reputable mortgage lender, real estate appraiser and real estate agent, and you will be able to reach your dream of becoming a homeowner, even in today’s housing market.

     

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