How can I spot a refinancing scam?
Good question! Scammers and spammers prey on people's fears and lack of caution, especially in uncertain economic times. People who may be underemployed and scrambling to cover household expenses every month can be overly eager to jump at the first home refinance offer that looks like it could make all their financial problems just disappear.
Your best defense is to be an informed skeptic--informed about your loan and your lender, and skeptical of out-of-the ordinary claims and sales pitches that sound too good to be true. For example:
- "No cost" does not mean "free." Lenders can legitimately offer a no-cost home mortgage refinance only by wrapping the fees into your new loan amount or by charging a higher interest rate. This doesn't necessarily mean it's a bad deal, but you should understand that there are costs involved.
- No reputable lender will try to pressure you into a refinance home loan or require thousands of dollars to "lock in" a rate.
- Know the terms of your existing loan: your interest rate, the amount you still owe, and the current servicer of your loan.
- If you are changing lenders, check out your prospective mortgage lender's reputation with your state's Financial Institutions department. Make sure the lender is licensed in your state, and find out if it has a record of complaints and disciplinary actions.
- Get everything in writing and take the time to read it carefully.
RefinancingRight.com is your go-to source for accurate, up-to-date information on home mortgage refinancing.