Warning signs of scams and unfavorable loan terms
The impact of COVID-19 has led to financial struggles for homeowners across the nation. In fact, a recent study conducted by OnePoll in conjunction with the National Association of REALTORS® discovered that more than 8 out of 10 American homeowners–81%–the COVID-19 pandemic has caused them unexpected financial distress.
"The effects of COVID-19 have led to some homeowners taking desperate measures to ensure they can protect their investments. Scamming activity increases during times like these, so homeowners must remain vigilant and be cautious of offers that sound too good to be true," said ECAR President Bonnie Nault.
Here are some warning signs of scams and unfavorable loan terms:
Sounds too easy
"Guaranteed approval" or "no income verification" regardless of borrower's current employment, credit history, and assets.
Large future costs
High-risk adjustable rate mortgages where payment rises significantly after the "teaser rate" period is seldom appropriate for families who already have had problems repaying other loans.
Barriers to refinancing
Prepayment penalties that make it hard for a borrower to refinance in order to pay off a high-cost loan by taking advantage of a low-cost loan.
No down payment loans
These loans may be split into two mortgages, with one having a much higher cost. Homebuyers should be sure they can afford the payments.
Unethical document management
Ethical lenders and brokers will never ask you to sign a blank document or a document dated before the date you sign.
Rent To Own Scam
The rent-to-own landscape can be a minefield of scams and deceptions designed to take your money—and leave sellers and buyers in the dust.
If you are a homeowner who is struggling or unable to meet your loan obligations, work with housing experts and your lender to find a solution, today. Don't wait until you fall behind to seek help. Acting quickly may help you keep your home and the money you have already invested into it.
REALTORS® are in the business of helping people become homeowners and want to do everything they can to make sure you can afford to stay in your home and remain cautious of potential scams. If your current lender isn't willing or in position to help, you may be able to refinance your current mortgage with another lender. REALTORS® may also be able to help you find responsible lenders that offer fair and affordable loans. Contact the Eastern CT Association of Realtors or visit www.easternctrealtors.com to find an associated Affiliate lender or speak with a member of the National Association of REALTORS® to learn more.
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