Monday, August 2, 2010

Avoid Refinancing Scams!

A few weeks ago Howtomakeadollar wrote a blog about how you can save money by refinancing your home mortgage. This is still true. In fact, interest rates are slightly lower now than they were then, so if you haven't refinanced yet, you really should do so immediately. Read the original blog here. Howtomakeadollar is now saving $557 per month because we refinanced a house. Thats major money.

But you shouldn't just refinance with the first lender that sends you junk mail. Lots of these lenders are identity scams. For example, lots of people will watch realtor websites for homes that have recently been sold. Once they get the address, they will send an official looking letter to the address, and give themselves a respectable name like "American Mortgage Group Inc.*" and they will urge you to refinance. They will offer some kind of interest rate that looks believable, but is lower than the current going rate. 

The refinance process involves a lot of paperwork, including your social security no, your birthday, your W-2 forms, and all that stuff. So if you respond to the advertisement, they will ask you  for this info. Once you send it to them, they are gone, and they have your identity. Its a really simple scam, and its nearly impossible to detect because all loans require this info from you.

You will probably also get similar offers through email. You can't really look them up online either, because its pretty easy to set up a respectable website online. As soon as the name they are using starts getting associated with scams, they will just change the name. So its virtually impossible to tell the legitimate lenders from the scammers. Just go with a respected lender thats been around for a while. If you've heard of them, they are probably legit.

*I have no idea if "American Mortgage Group Inc." is a real company. I made it up. Hopefully I don't get sued for defamation. My point is that scammers will use very normal and believable names.

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