Loan Fraud : Steps To Avoid

Loan fraud is prevalent and many first time home buyers and seniors get taken advantage of.  This is making false statements in order to gain better terms or a larger loan than you are entitled to. Here are some pointers to help you avoid these traps.

Firstly always comparison-shop to avoid loan fraud. If you are not given a choice by the lender or broker then it is best to avoid doing business with them. Read all paperwork carefully and never sign any documents that are blank or contain false statements.

Be sure the closing costs and loan terms are the same as the original ones you agreed to. Be up front about your income, expenses and cash you have for the down payment. Be careful of taking out high risk advances such as loans with balloon payments, or interest only payments. Look out for prepayment penalties. Think twice before you refinance and do not do so too often unless you will really save money. Check the appraisals to make sure they are not fraudulent.

Do not get talked into borrowing more money than you can afford. If you default in payments you risk losing everything including your home. The best way to avoid loan fraud is to take time to do your research well and not be talked into something you are not sure of.

More ways that are considered illegal:  Not declaring the source of down payment, incorrect appraisal amount, renting and pretending you will be living in the home, plus undisclosed rebates are just a few more ways deception is committed. Loan to value is another common fraud and involves falsifying the income of the borrower to obtain more funds for the advance.

Not declaring that money was gifted to the buyer for the down payment is also illegal. Taking a second lien on the house without informing the primary lender is another common deception practiced by unscrupulous lenders.  Falsifying Ernest money by declaring more has been put up than it really has, and faking a gift letter are also common forms of loan fraud. A skewed advance to value ratio is when 2 contracts are made, one showing a lower rate and the lender getting a second one with a higher rate.

Your credit history will affect your interest rate on any money you borrow. It is foolish to think that you can get a low rate with poor credit history but this is what unscrupulous lenders will have you believe. If the deal looks too rosy it probably is, and you are about to become a partner of loan fraud.  This can really get you into a lot of trouble and can even get you put in jail. If something does not look right check into it closely and do not sign anything without reading it very carefully.

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