Have you heard about loan flipping?
Loan flipping occurs when a predatory lender persuades a homeowner to refinance a mortgage multiple times, often borrowing more each transaction. Bankrate.com reports that these lenders charge high fees and points. Meanwhile homeowners face higher loan payments after being tricked into borrowing most of their equity. Seniors especially need to be cautious. They typically have significant home equity and may not recognize the scam. They’re often tempted with a cash-out refinance to cover repairs or renovations so that they can age in place. Some homeowners desire to refinance so they can cover their child’s education. Loan flippers offer to help you free up cash by refinancing the mortgage at lower rates. How nice! Innocent homeowners are left with closing costs and other fees with each refinancing. Plus, the scammer’s fees are ridiculously high. Eventually the refinance drains equity from the home. The scammer gets the cash from their fees and the homeowner is left to fend for himself.
You can avoid this kind of nightmare by contacting your lender, a bank or a credit union to see what better deals they can offer. When lenders seek you out without your request, beware. Work only with legitimate bankers or lenders. They’re required to provide loan estimates and closing disclosures of all fees and costs. If you aren’t comfortable handling all the details yourself, then recruit a trusted friend to help you. Wise stewards must learn to take control of their money and flee from the temptations of the dishonest.
And if you’re overloaded with credit card debt and tempted to refinance, I recommend Christian Credit Counselors. They can create a debt management plan that will work for you. For more information call the Crown Helpline: 800-722-1976 or visit online at crown.org/.ccc.