Beware of Mortgage Scams: #4 – Loan Flipping

Home loan scams are as active as the real estate market itself.  In this 5-part series, homebuyers are cautioned on various scams that are prominent in today’s real estate and loan markets.

#4 –Loan Flipping

With mortgage rates at a record low, many homeowners have at least considered refinancing their mortgage. The “Loan Flipping” scam is commonly lead by less than honest lenders who prey upon those with a good amount of equity in their property that might be looking to refinance for various reasons.

Typically, they will look for those that are having financial difficulties or needs such as paying for college or medical debt but that have a substantial amount of equity in their home. They will be enticed by the deal to refinance and have some extra cash to pay off debt or fund college.

Though the rate is typically lower than the mortgage rate they are currently carrying, the fees associated with these types of loans are most certainly higher than a loan through a reputable lender and will eat away at the equity without the homeowner even realizing it.

Read about more scams in our ‘Beware of Mortgage Scams’ series.