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Avoiding The Scams

If you've read through this site, you understand the difference between speculating and investing.  The first red flag that you may enountering a real estate or mortgage "speculating" scam, is that it seems really easy that you will earn guaranteed money.  That may seem obvious, but often the sales tactics are more subtle, and start with things that urge you to take action before you "miss out"

*Housing prices have never been this low!

*Buy now before prices go up!

*This house appraised for $25,000 more 6 months ago!

*Poor credit welcome!

*No income needed to get this loan or buy this house!

*2% rate offered by Obama administration for modifications!

If you run across any thing advertising these types of benefits, then here is how you can protect yourself:

1. Never spend a dime upfront to pursue anything.  No fee for review of your situation, no upfront fee for modifications, no "retainer fee" or other fee to hold the price of the house--zip, zilch, nada. 

2. Don't spend money on credit repair unless the company is checked out by local non profits.  Links are provided below for legimitate government housing agencies and non profits.  Many nonprofits provide no fee credit counseling to help you.

3. Get any rent to own offer checked out by nonprofit or government housing to make sure they aren't on a fraud "watch list".

4. NEVER NEVER NEVER pay a fee to modify your loan.  Even if it is a lawyer advertised service, there is no documented data that proves that any for profit modification service has higher success rates than non-profit modification counseling services. 

5. Never sign a contract to sell your house or your interest in a house without getting a second opinion from a neutral non profit/government housing entity.  You could be signing away your interest in your house and still be responsible for every $ of the mortgage on it. 

6. NEVER buy a house simply because you think prices are going up, or because you think they are at their lowest, or because you can get a low "starting" rate of 3.5%.  Think about the cost of the mortgage over 10-15-20 years, and then decide--am I buying because I expect a big return on my purchase when it resells (speculating), or because I want to live in this house, in this neighborhood, for a long time, regardless of whether prices rise or fall (investment).

Copyright 2011 Dennis "Frank" Ceizyk Jr