Buying a home is a huge financial decision. Therefore, it is important to be cautious at every stage in the buying process. Numerous financiers in the market provide deals and offers to those seeking to buy a home. You may, therefore, avail of such offers in order to get the best deal.
However, there are numerous instances where individuals fall prey to scams. Imposters generally try to extract financial information of potential borrowers. Some scammers target those with a low credit score, making them believe that they stand a chance of getting a loan. It is, therefore, important to be alert while borrowing a loan.
Following are five ways to identify home loan scams.
- The lender asks for an advance fee
Fraudsters usually ask you to pay an upfront fee, with the promise of providing the loan once the fee has been paid. Remember, financiers do not ask you to pay an advance fee. Banks and Non-Banking Financial Companies (NBFCs) only require a processing fee, which has to be paid once the loan application has been approved.
- The lender asks you to provide your financial details
There have been numerous scams wherein lenders have asked borrowers to provide their financial details. Such a scam is known as phishing, which is typically carried out through unsolicited email or websites that pose as legitimate sites. Such sites attract unsuspecting individuals to provide their financial details. On receiving the necessary information, scammers deduct a huge amount from the borrower’s account.
- The lender asks you to sign the contract immediately
Fraudsters may use pressure tactics to make you sign on the documents immediately. They do not give you much time to read the terms and conditions of the contract. However, do not succumb to such kind of pressure. Instead, read the contract carefully and sign on the dotted line only once you are convinced of all the terms of the deal.
- The financier hesitates in answering any queries
Generally, the representative of the bank or NBFC has adequate knowledge of the loan eligibility, documentation, and other terms of the deal. It is the duty of the representative to explain all the terms of the contract to the prospective customer. If you notice that the representative does not have adequate knowledge about your queries, check the authenticity of the financier before going ahead with the transaction.
- The financier promises you a good deal in spite of a bad credit score
Every lender conducts a credit check on the applicant before approving a loan. A credit score is an important aspect of the loan approval process as it determines the borrower’s ability to repay the loan. Higher the credit score better will be the chance of getting a loan approval. Quite often, scammers take advantage of individuals with a poor credit score and trick them into making a small payment for loan approval. Once the payment has been made, the lender does not maintain any further contact with the borrower.
It is important to choose a well-reputed financial institution while applying for a home loan. Do not fall prey to fake websites and do not entertain calls that promise you a loan without knowing your details. Instead, do your due diligence and have adequate information about the various loan-related scams to avoid getting duped.