More Florida Real Estate Rip-Offs to Avoid

Applying for a mortgage can be difficult enough without having to worry about Florida home loan scams. Unfortunately, many agents and lenders out there take advantage of client ignorance in this area.

But that won’t happen to you now! Here are more scams to avoid as you move forward with your loan application/process …

- Equity stripping: A lender convinces you to take out a Florida home equity loan that you can’t really afford by padding your income on the application to help get it approved. As soon as you fail to keep up with the payments, the lender forecloses. The general rule: If you know your income isn’t high enough to meet the monthly payments on a home equity loan, avoid it.

- Hidden Florida home loan terms/balloon payments: To avoid foreclosure, a new lender helps you refinance by offering lower monthly payments. But read carefully: The payments are so low because you’re only paying interest. When the entire principal comes due in a balloon payment at the end of the term, kiss your house goodbye if you can’t make the payment.

- Loan flipping: You apply for Florida home loan refinancing, in need of money. A few months later, the lender offers you more cash by repeating the procedure. But with each loan, you incur more charges in points and fees. You’ll have a pile of cash, but the pile of debt is much larger AND must be paid back with interest.

- Signing over your deed: A distressed homeowner having trouble keeping up with the mortgage is pursued by another lender, who tells him it’s necessary to deed the house over to him in exchange for new financing. Often, the money never comes, and the scam artist sells the property to someone else.

- Lease options: Landlords lure wannabe homeowners by signing them up to rent a home with lease-option financing. Typically, the renter will pay as much as $16,000 above the market rental rate, with that extra money earmarked for a down payment. Usually, however, the money is wasted, as the renter fails to qualify for a Florida home loan and never buys the house.

- Florida home improvment loan lies: A contractor offers to arrange a loan through which you can pay for a remodeling or a major repair. After he begins the work, you’re asked to sign a bunch of papers that you find out later were authorizations for a home equity loan, complete with inflated interest rates, points and fees. To add insult to injury, the contractor, who has taken his cut from the lender, has little incentive to stick around and finish the job.

Now you know. Equipped with information about how various scams work, you should be assured of a fair, affordable home buying process.