Buying a new home is a big financial decision and life change. Between moving, decorating, and getting paperwork in order, the last thing you should worry about is being scammed. However, criminals have become more creative in targeting consumers and homeowners, which can lead to a major financial headache if you fall victim to it. Data from the FBI’s Internet Crime Complaint Center indicates that over 11,000 victims reported real estate and rental fraud in 2018, resulting in more than $149,000,000 in losses. Here are 3 of the most common real estate scams to look out for so you know what to avoid.
Escrow Wire Fraud
With this type of scam, you’ll typically get a phone call or email from someone claiming to be the escrow or title company containing instructions on where to wire the money. The scammers will set up fake websites that appear to be your home lender, and you lose money when you follow their seemingly real instructions.
Before you send money to any third party, consult your original home paperwork and look for the original phone numbers and email addresses. Contact them to verify whether or not they sent you any wiring requests. Don’t click on any email or text links without double-checking the information against your lender first.
This is when a predatory lender tries to persuade you to refinance your home mortgage repeatedly, often borrowing more money every time. They charge high fees on each transaction and you’ll be stuck with higher loan payments you can’t afford which results in you borrowing most of your home’s equity.
If you’ve recently completed a refinance, don’t jump into another new one right away. If lenders are seeking you out and you haven’t requested any help, consider it a red flag. Work only with reputable banks and lenders when it comes to anything mortgage-related.
Getting behind on mortgage payments can make someone desperate to save their home, especially with the hardships we’ve gone through in 2020. Anyone has access to public records of pre-foreclosure, including scammers, and they’ll offer foreclosure relief to capitalize on your vulnerability. They claim that they can save your mortgage situation for a large fee up-front and then leave you in the dust with more financial strain than before.
If you’re experiencing any hardship around your mortgage, work directly with the loan company to discuss modifying your loan or request forbearance. An easy way to determine scammers will include them telling you not to talk to your lender about the situation. Open up the lines of communication with your lender and don’t trust any third-party site, especially if it seems too good to be true.
If something doesn’t seem right, trust your gut. Make sure you’re only working with reputable, accredited companies and avoid random links you may receive in texts or emails. Your home is one of your biggest investments, so be on your guard in every way possible.