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Home-Buying Scams

By Scam Awareness | November 5, 2019

Safe neighborhood, check. Beautiful floor plan, check. Great investment, check. Before taking the next steps in closing the deal for your new home, it helps to be aware of another checklist: what falls under home-buying scams. Many people assume it'll never happen to them, but millions of dollars in fraud from home-buying scams are reported annually.

A common home-buying scam is called loan flipping. This is when a shady lender convinces a home buyer to refinance their mortgage repeatedly and each time presents a transactional fee or higher interest rate, therefore raising the original loan payment.

A second common fraudulent tactic are rental scams. It's when someone posts property rental ads on social sites to lure you in and then asks for an upfront payment to hold as a deposit before letting you see the property.

Another one to keep an eye on are escrow wire fund transfers. Many swindlers set up fake websites and phone numbers with instructions on where to wire your funds, little do you know it might be sent to an offshore account. Never send money without verifying with a live person over the phone from a number that you have previously called and verified.

Here are some more useful tips to avoid home-buying scams:

DO:

  • Always trust your gut when you sense something peculiar
  • Use a check to make a payment so you have an automatic receipt
  • Get a trusted advisor to give a second opinion of the property estimate  

DON'T:

  • Sign anything prior to having an expert/specialist look over documents
  • Supply private info: social security number or bank account info
  • Complete transactions over the phone or email

Stay safe by learning more about these types of scams. To report a scam, reach out to the FCC or FTC immediately.

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