Be Wary of Toronto Mortgage Scams
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If you’re in the market for a new home, you may be considering hiring a Toronto mortgage broker to help out by doing the legwork and the research that goes into find a lender. However, there are a few things that you should be aware of before you hire the first mortgage broker that comes along. As with any other profession, there are honest, hard-working brokers and there are corrupt, unscrupulous ones. It is important to be aware of the common scams that have been used to prey on inexperienced home buyers.
A common trick used by some less-than-reputable mortgage brokers is to entice homebuyers by presenting a “low-ball” offer of a price that they have no intention of honoring. Once a homebuyer is in the door, the broker will then attempt either a “bait and switch,” which is when they tell you that the property or interest rate you were interested in is no longer available. They will then proceed to try to sell another property or get you to sign for a loan at a higher interest rate.
Another scam is the “let ‘em dangle” method. This is very similar to the “bait and switch,” except that instead of trying to sell another property or service, the mortgage broker will insist that, if you just wait a little longer, the market will drop to the point that will make the advertised special available again. Mortgage brokers and lenders will both practice these tricks on inexperienced homebuyers. In these cases, common sense is your best defense. Remember the old saying that if a deal seems too good to be true, it probably is.
Another trick that homebuyers need to be wary of is the “bait and remember” scam. In this situation, a mortgage broker or lender will conveniently “forget” to mention certain fees until the homebuyer is committed and cannot back out of the deal. To avoid falling victim to this scam, it is best to insist that the mortgage broker or lender provide you with an all-inclusive list of all fees that are your responsibility to pay, including third-party fees, such as for credit reports and appraisers. This way, should surprise fees surface, you will have proof that you were not notified in advance.
As a homebuyer, you should also be suspicious of a mortgage broker that pressures you into making false statements on your loan application. If a mortgage broker is telling you to falsify information to increase your chances of having the loan approved, that person does not have your best interests in mind. Instead, the he is only focusing on his commission, which is dependent upon loan approval. Lying on a mortgage application means that you have committed mortgage fraud. The penalty can be a hefty fine or even jail time. It’s simply not worth the risk.
A mortgage broker can be of great assistance when buying a new home. However, it is important that you do business with a reputable individual and not someone just looking for a quick commission. Ask around and listen to you instincts and you can save yourself a lot of time and trouble.
For information on working with a Toronto mortgage broker to get a Toronto mortgage, contact a mortgage specialist at Canadian Mortgages Inc.
