Buying a home is a big step. It is likely the most expensive purchase you will make in your life. If you are not a real estate expert, you probably do not know everything about the market. Although getting a mortgage may seem simple at first (signing a contract and paying the cost), there are several precautions home buyers must take during the process. The following list explains occurrences to beware of when buying a property.
Poor-Quality Flipped Houses
Buying a property at a low price, renovating it and selling it for thousands of dollars in profit — or flipping houses — is not illegal, but is subject to mortgage scams. Beware of sellers who lie about the cost of a home to make a larger profit. When a buyer gets a loan for the inflated property value, everyone involved in the scam profits. Telltale signs of mortgage scams like this one include upfront fees and paying anyone besides your lender.
Always look at the deed of the house and request to see maintenance forms, if they are available. Better yet, hire a real estate lawyer who can look through the legal terminology in a contract. They are trained to spot scams like this and will often have a home inspector come in and make sure the home is sound. If a seller is opposed to this kind of in-depth snooping, it may be time to move on to the next property.
The Bait-and-Switch Scam
The bait-and-switch scam is a common one that occurs when a buyer is offered a loan with an unusually low interest rate or monthly payment. Then, when the buyer is about to close on the deal, the lender offers new, less attractive loan terms. Many people are stuck closing the deal because they put so much time and effort into securing it.
The lender has done nothing illegal, so he profits and the buyer ends up in an unfavorable situation. Watch out for loan offers that seem too good to be true — they probably are. Once again, it may be wise to hire a lawyer in this kind of situation. They can navigate around the bait-and-switch terms and make sure you are getting the best deal for your new home.
Pay attention to the excessive costs added to your mortgage. You cannot completely get rid of them, but you can lessen them. If you notice high numbers in the application fee, mortgage rate lock fee, loan processing fee, underwriting fee or other processing and documentation fees, negotiate. These fees can often be reduced. An experienced lawyer can assist you in negotiations to get these fees lessened or even eliminated.
Scammers take advantage of your inexperience and vulnerability. Protect yourself by noticing the signs of these mortgage scams. Be a wary home buyer and seek the legal assistance of a real estate lawyer.