Refinancing your home can be a smart financial move, but it also opens the door to potential scams. This article delves into the deceptive tactics used by some loan officers, providing you with the knowledge to protect yourself and potentially save tens of thousands of dollars.
Refinancing scams have become increasingly prevalent, and it's crucial to be aware of the tactics used by unscrupulous loan officers. According to the Federal Trade Commission (FTC), mortgage fraud complaints have surged by 37% in recent years (FTC). Understanding these tactics can help you avoid falling victim to them.
When evaluating your loan application, lenders primarily focus on three critical factors:
Your FICO score, ranging from 300 to 850, is a numerical representation of your creditworthiness. It considers various factors, including credit card payment history, car loans, student loans, collections, and charge-offs. A higher FICO score generally translates to better loan terms.
Late payments on your mortgage can significantly impact your interest rate. According to Experian, a single late mortgage payment can lower your credit score by up to 100 points (Experian).
Bankruptcies can either increase your interest rate or make you ineligible for a loan, depending on the lender's policies. The American Bankruptcy Institute reports that over 750,000 individuals filed for bankruptcy in 2020 (ABI).
One common tactic used by shady loan officers involves discussing irrelevant credit issues to manipulate you into accepting unfavorable loan terms.
Your loan officer may ask you about non-mortgage-related credit issues, such as late credit card payments. They will request explanations for these issues, even though they are irrelevant to your loan approval.
By discussing these irrelevant credit issues, the loan officer achieves three objectives:
To protect yourself from these manipulative tactics, consider the following steps:
The majority of loan officers know the type of loan you qualify for as soon as they pull your credit. If you encounter a loan officer using manipulative tactics, it's a red flag. Consider finding a more reputable company to work with. By staying informed and vigilant, you can protect yourself from refinancing scams and secure a loan that truly benefits you.
By understanding these statistics and the tactics used by shady loan officers, you can make more informed decisions and protect your financial future.
Understanding Permanent Life Insurance Policies
Permanent Life Insurance comes in two distinct forms: Whole Life - This type of Life Insurance policy is immune to factors that would otherwise cause an insurance policy's premium to increase. Two factors that determine insurance premiums are mortality rate and expense costs. As you age, your mortality cost increases and should therefore increase the insurance premium.
How to Get Life Insurance
Do you have Life Insurance? Do you know how to get it? This article explains what is required in order for a life insurance policy to be issued.
The Primary Types of Life Insurance & How Their Cost is Determined
There are many forms of life insurance policies available to a potential policyholder but all life insurance policies will always fall under two different categories: Term Life Insurance - these types of policies are only active for a specified amount of time of your life, called a "term". When the term ends, so does the policy. Payout only occurs should the insured die sometime within the policies defined term.
