Buying a home is one of the biggest financial decisions people ever make. Unfortunately, it’s also a process that attracts scammers looking to take advantage of homebuyers’ excitement and inexperience. From fake fees during the loan process to wire fraud at closing, these schemes can cost unsuspecting buyers thousands of dollars – or worst-case scenario, their new home entirely.
Here are some of the most common mortgage scams to watch for, along with tips on how to protect yourself.
One of the most widespread scams today targets homebuyers right before closing. Scammers hack into the email accounts of real estate agents, lenders, or title companies, then send fake “updated” wiring instructions to the buyer. If the buyer wires funds to the fraudulent account, the money is nearly impossible to recover.
How to protect yourself:
Always verify wiring instructions directly with your title company or lender over the phone using a known phone number. Be suspicious of any last-minute changes in payment details sent via email, and avoid clicking links or downloading attachments from unexpected messages.
Some scammers target recent homebuyers who may be stretching their budgets. They promise to lower monthly payments or prevent foreclosure, in exchange for a hefty upfront fee. IN many cases, these scammers simply take the money and disappear, leaving homeowners worse off.
How to protect yourself:
Work only with your lender or an HUD-approved housing counselor if you need loan assistance, and never pay large upfront fees for “guaranteed” mortgage relief.
Some fraudulent lenders advertise low rates or special deals, but switch the terms at the last minute – charging higher rates, excessive fees, or adding hidden costs into the loan. By the time buyers realize, they’re already locked into closing.
How to protect yourself:
Review your loan estimate and closing disclosure documents carefully. If in doubt, ask your lender to explain any changes in plain language before you sign. Ultimately, if something doesn’t add up, don’t be afraid to walk away or get a second opinion.
After closing, some scammers contact new homeowners pretending to be from their lender or mortgage servicer. They may request personal information, payment details, or “processing fees” to set up the account.
How to protect yourself:
Verify any request by calling your lender directly using the customer service number on your mortgage documents. Also, be cautious of unsolicited calls or emails asking for Social Security numbers, bank details, or payments.
Some buyers are targeted with offers to “share equity” or sell their mortgage to an investor for quick cash. These arrangements are often predatory, stripping homeowners of equity or even ownership rights.
How to protect yourself:
Avoid signing contracts with companies or individuals promising quick access to your home’s equity. IF you’re truly interested in these avenues, consult a trusted advisor or attorney before entering any equity-sharing or transfer agreement.
Stay vigilant and ask questions
Mortgage scams succeed when buyers feel rushed, pressured, or too overwhelmed to ask questions. The best protection is to slow down, verify information with your trusted lender or title company, and never send money or share personal information without double checking the source.
With the right precautions, you can move through the homebuying process – and into your new home – with confidence and peace of mind.
Make Minnwest Bank your mortgage lender of choice
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You'll always work with the same lender from start to finish. Most servicing and processing stay in the same location. As a community bank, we offer flexible terms and customized loan packages at highly competitive rates.
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