May 28, 2018
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Mortgage Refinancing Scams - Last Minute Changes

What is Refinancing?
Refinancing is a transaction in which a homeowner gets a new home loan to pay off their existing one. For those with good credit, it can be a good way to get a lower interest rate or to change a variable rate loan to a fixed rate. Refinancing should always benefit the homeowner; however, for those who are experiencing financial difficulties, have growing debt or poor credit refinancing can be loaded with pitfalls and often hurts the consumer.

Homeowners who are financially vulnerable can easily become the target of greedy mortgage companies, brokers, and even con artists. Although the actions of some of these lenders aren’t necessarily illegal, the result can be devastating. Not only can homeowners end up with a bad deal, they can end up with a home they can no longer afford. One tricky practice commonly used by fraudulent lenders is changing the terms of the loan at closing.

Any homeowner will tell you how unnerving it is to close on your loan. You’re bombarded with papers and directions to sign here and initial there. Most of us trust that the numbers in the closing documents reflect what was originally agreed upon when you “locked in” your rate as discussed with your lender. It’s imperative to know that banks, lenders, and brokers routinely change loan terms at the last minute—and it’s legal.   Borrowers may not even notice it until later when it’s too late. There is no guarantee of promises that were made during the pre-approval process.

It’s a common thing to hear horror stories about last-minute changes popping up before and during mortgage closings. Curve balls that borrowers need to look out for are:

·        Rate changes

·        Terms of the loan changes

·        Requests for more information

·        Closing costs increase

·        Unexpected fees

What you can do?
Ask to see your settlement statement
which lists all the actual closing costs and charges. Borrowers have the right to view it one day before closing. Don’t be shy about asking questions and challenging any of the numbers because when you’re sitting down at the table to sign, it’s usually too late. Plus, not many people feel confident enough in the middle of a closing to dispute the terms.

Be aware that even reputable lenders make unfair deals. If you don’t closely monitor your lender throughout the loan process to guard against trouble, you can end up with a mortgage you cannot afford.



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