The purpose of refinancing your mortgage is to obtain a lower interest rate, therefore it has a potential to save you some money in the long run. Although not all bad refinancing deals are the result of scams by unscrupulous lenders, there are however many predatory lenders out to take advantage of you.
So if you are in the process of refinancing your mortgage, you need to learn how to protect yourself from those predatory mortgage lenders. Do your due diligence and research before you agree to sign any legal contract. Knowledge is your best ally when it comes to protecting oneself from scams and dishonest mortgage lenders. Knowledge is power indeed!
Refinance
But, how do you recognize the signs of mortgage refinancing scam?
The first precaution is to begin doing some research to gain the necessary knowledge. The Internet is a great place to start, you can quickly gain some basic mortgage refinancing knowledge by doing a few searches online. You can also call the companies and ask questions. Become familiar with the mortgage lingo and the business phrases used in this industry. While doing your research, you want to make certain that you understand what are your rights and the lenders's obligations as well.
By law, mortgage lenders and financial institutions have the obligations to disclose and inform you the rate, fees, and closing fees of their loan products. You should also know how much time you have to close the deal before rates are subject to reevaluation. Be very cautious with those lenders who refuse or try to delay providing this kind of information openly.
For example, there are many pesky mortgage lenders do not tell you when locked in rates run out. They do this on purpose of course, so they can quote you a new rate with one or two points higher during closing. This is the most common scam many mortgage borrowers fell into.
Demand the Good Faith Statements from lenders, analyze carefully all the costs incurred, ask questions and demand explanations for every cost that you don't understand or looks obscuring. You have the right to do so. If the lenders refuse to provide the information you request, don't be afraid to back out from the deal.
Another common mortgage refinancing scam sign you need to be aware of is the paperwork. There are shady mortgage lenders who try to confuse you with paperworks. They know that people don't like to read paperworks and they will slip in terms and fees in a legal contract so that they can get more money out of your pocket.
You should not be lazy reading and analyzing all the fine prints. Again, study the Good Faith Statements carefully, it consists of all the critical information there. Be aware when lenders try to encourage you to borrow more and push you to agree on higher payments. They are doing this to increase their profits. They don't care if you will get foreclosed in the future.
So, knowledge is your greatest protection from the scammers in mortgage refinancing. Check out the lenders thoroughly and be observant to those signs that smell scams. The best terms and rates are out there, so do your homework well in order to get the best deal.
Mortgage Refinance Scam - How to Avoid Mortgage Loan Scams
If you need to do more research, visit our mortgage refinancing guide online [http://www.mortgagexplain.com/refinancing/]. You can also download a free report at our home mortgage site online [http://www.mortgagexplain.com/]. All the information are there to help you get the best mortgage loan deal.