Refinancing can be a great way to reduce your monthly payments, and in some cases, allows homeowners to keep their home. However, BBB warns to proceed with caution when dealing with some lenders.
BBB often hears about mortgage relief scams. These common scams are designed to lower your available cash but not your interest rate:
Direct mail solicitations. These solicitations often make exaggerated claims of savings, bear symbols which appear to represent government agencies and create a sense of urgency by stating “limited time offers.”
False mortgage refinancing ads. These ads are typically found on social media sites such as Facebook and Twitter. These ads make phony claims of being sponsored by government rescue programs. They may include a website link directing you to an “online refinance center.” Many of these bogus sites request personal identifying information or may require upfront fees, which are not only illegal, but can result in hundreds of dollars being paid for a service you never end of getting.
If you are considering refinancing, BBB suggests you shop around, compare prices and negotiate.
Additionally, be cautious of smooth-talking lenders that contact you offering easy credit, guaranteed low-interest loans or loan terms that sound too good to be true. Fraudulent lenders often prey on people who are desperate for cash to pay bills, make home repairs or who do not understand the mortgage loan process. Their loan terms can include excessive fees, high interest rates and provisions that can make it expensive for you to get out of the loan.
If any lender asks for an up-front fee before you can obtain the loan, this is a red flag. Be sure to check with the BBB to see the Business Review of the lending institution(s) you are considering.