When buying a home, securing a mortgage is often one of the biggest financial decisions you’ll make. Unfortunately, it’s also an area where scammers prey on unsuspecting buyers. Mortgage scams can cost you thousands of dollars and put your dream of homeownership at risk. But don’t worry being informed is your best defense. Here’s how to spot and avoid common mortgage scams.

Common Mortgage Scams to Watch Out For

1. Phantom Help Scams

In this scam, a fraudster claims to help you avoid foreclosure for an upfront fee. They may offer to negotiate with your lender or even promise to take over your mortgage payments. Once they have your money, they disappear, leaving you in a worse financial situation.

How to Avoid It:

• Never pay upfront fees for mortgage assistance.
• Contact your lender directly for help with payment issues.

2. Loan Modification Scams

Scammers promise to modify your loan terms for a fee, such as reducing your interest rate or monthly payments. They often use official-sounding names or claim to be affiliated with government programs to gain your trust.

How to Avoid It:

• Verify any loan modification offers with your lender.
• Use free resources like HUD-approved housing counselors.

3. Bait-and-Switch Schemes

This occurs when a lender advertises one set of terms but changes them at the last minute, leaving you with a higher interest rate or unexpected fees.

How to Avoid It:

• Carefully review all loan documents before signing.
• Ask questions if any terms seem different from what was initially discussed.

Tips to Protect Yourself

• Work With Reputable Professionals: Choose a licensed lender, agent or attorney with good reviews and references.
• Verify Credentials: Check licenses with your state’s real estate or financial regulatory agency.
• Be Skeptical: If an offer seems too good to be true, it probably is.
• Read Every Document: Take your time to understand all terms before signing any agreement.

Buying a home is an exciting milestone, but it’s crucial to stay vigilant during the mortgage process. Scammers are continuously finding new ways to exploit unsuspecting buyers, but you can protect yourself by staying informed, working with trusted professionals and taking the time to verify every step. With these tips, you can avoid common mortgage scams and move confidently toward homeownership.

Stay safe, stay informed and make your dream home a reality!