Refinance Scams - A Few Things To Watch Out For When Refinancing Your Mortgage

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Refinancing Scams: Key Points to Consider Before Refinancing Your Mortgage


Refinancing your mortgage is a significant decision that requires careful consideration. To protect yourself, be aware of potential scams and misleading practices.

Key Concerns When Refinancing


Yield Spread Premium (YSP)

Be cautious if a broker hesitates to disclose their YSP?"the compensation a broker receives from a lender for setting you up with a higher interest rate or imposing stricter pre-payment penalties. Unsolicited refinancing offers often come from predatory lenders, so be vigilant.

Good Faith Estimates

Remember, Good Faith Estimates are only approximations and can change. A dishonest broker might take advantage of this ambiguity.

Understanding RESPA

The Real Estate Settlement Procedures Act (RESPA) prohibits any settlement service provider from charging hidden fees or receiving undisclosed payments for referrals. Insist on a detailed list of fees from your lender, ensuring no inflated charges. For example, they cannot charge you $25 for a credit report that cost $8.50. Clearly communicate that you are exploring other options if you feel overcharged.

Trusting Your Instincts

If something feels off during your refinancing process, trust your instincts. Lenders might downplay your Right of Rescission, which allows you to cancel the loan within three days after closing without penalty, except for any out-of-pocket expenses like appraisals. Remember, feeling some buyer’s remorse is common, even when the move benefits you.

By staying informed and vigilant, you can navigate the refinancing process with confidence and avoid falling victim to scams.

You can find the original non-AI version of this article here: Refinance Scams - A Few Things To Watch Out For When Refinancing Your Mortgage.

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