Recognizing Florida Home Mortgage Schemes

One of the strongest sections of the real estate market at the moment is property with an asking price of $300,000 or less, the Naples Sun-Times reports.

As of today, there were almost 200 sales pending in this category in the Naples area alone. We don’t know for sure, but it seems a pretty safe bet that most of the buyers in this category will seek Florida mortgages.

Going to a Florida mortgage lender and asking for money is more nerve-wracking than it was to ask your parents for money for the movies on Saturday night.

You have to fill out endless paperwork and answer a ton of questions that are sometimes more embarrassing than the grilling you received when you were late returning the car.

While the mortgage broker or mortgage lender may be smiling at you and offering you a cold drink during this process, it’s the computer that ultimately approves your loan, in most cases.

A good Florida mortgage broker will have access to more than one home loan lender, so even when the computer says “no,” the broker may find someone who says “yes,” so don’t despair.

No one really wants to go through this process more than once, but the experts say you may be spending way more on a mortgage than you need to, unless you make the effort to shop around.

The amount of money that can be saved or lost on a Florida mortgage loan is at times much more than the amount between the asking price and the ultimate sale price of the property.

So, it is important to understand the mortgage process and the ultimate Florida mortgage costs - not just the monthly payments, or short term costs, but at the end, if you hold the mortgage until it reaches maturity.

Do your research. Talk to people. Get as comfortable as you can with all the terms and the concepts of buying a home. Many people do not do that. When they don’t, they can end up the victims of mortgage fraud.

Earlier this month, Florida’s Attorney General Bill McCollum waved a red flag over this issue. He said that mortgage scams were among the top 10 categories of complaints received by the Attorney General’s Office last year, particularly for Florida home equity loan transactions.

Home equity loans allow you to borrow against the equity in your home, or the difference between the value of the home and the amount you owe on it. These are second mortgages - not credit card loans. Here are some of the scams and what usually transpires:

• Equity stripping: A Florida mortgage loan provider encourages a borrower to falsify his or her loan application in order to qualify for a greater mortgage amount.
• Loan flipping: A Florida home mortgage lender repeatedly encourages a borrower to refinance their loan, which may require them to borrow more money, and as a result, accumulate higher fees.
• Bait and switch: A Florida home loan lender offers one set of terms prior to the loan application and then pressures the borrower to agree to a different set of terms after the application is actually signed.
• Deceptive loan servicing: A Florida mortgage lender does not provide the borrower with accurate or complete account statements and payoff figures.

It can seem daunting. But your first line of defense is to shop around before choosing a lender. First check to see if the mortgage lender is properly licensed and certified. You can do this at Florida’s Office of Financial Regulation.

Read all items on the contract or application carefully. Ask for detailed explanations of any dollar amount, term or condition you don’t understand. Ask if credit insurance is required as a condition of the loan. Never sign mortgage applications or contracts with blank spaces, and do not to sign if the terms are not the same as those they were given when they applied.

If you feel pressured into making a decision, take a breather before you proceed. Remember, the loan will still be there when you’re ready.