Mortgage Fraud

No one wants to get caught up in a mortgage fraud scandal the buyer or seller of the home. If you lie on any part of your application, this is considered mortgage fraud. This should be avoided at all costs. However, there are other types of mortgage fraud as well. During the home buying process, you are working with various types of real estate and financial professionals. There are many ways that they could be using deceptive practices. This is a guide to avoid it.

For Sellers

They should get previous business professionals contact information who has worked in real estate or with mortgages professionals. This will help people avoid dealing with the wrong people. Also, it is important to make sure the professional you work with is licensed. It is also important for sellers to comprehend everything that they sign. Hire a lawyer if something is not clear. Also, it is important to not sign anything with information left blank. This means someone could fill in the blank part however they want and that could be a trap. It is important for sellers to be firm about their asking price. Sellers should not agree to an amount above your asking price. This could lead to mortgage fraud. This extra important if you are asked to make up the difference after the property closed. You should also deny in extra money for ‘repairs’ or anything of that nature. This could lead you to fraud. It is also important to be careful of proposals that claim will save you from foreclosure. The seller could end up paying thousands of dollars and end up losing their home. It is a better idea to work with a good, reputable lender that will give you the whole set of closing documents.

For Buyers

Homebuyers should look out for “no money down” offers. This is a red flag for sure. It is important to review the sales history of the property you would like to purchase. Also, it is important to have your own real estate professional or appraiser determine the value of the home you would like to purchase. It is important to make sure the seller really owns the property. There are scams like this that happen so it is best to take caution. Also, do not give any personal information to someone claiming they are going to purchase a house for you in their name. This would be a bad move that good lead to legal problems for years to come. Just like sellers, buyers need to understand everything that they sign during the home buying process. Do not sign anything you do not understand. If there is any lack of understanding, hire a lawyer to assist you. As mentioned before, do not sign any forms with information left blank or that may contain incorrect information. Many times a broker will try to overstate the homebuyer’s income in hopes of making more money for themselves. You should always deal directly with whoever you are borrowing money from so there are no discrepancies. Every homebuyer should have the complete set of the closing documents. This will contain all the information they need and protect themselves against fraud.

You should be honest about your employment income. If you lie about it, there is potential for this to escalate. You should make sure that the professional you are working with does not lie about this as well. This could be a big problem. These are all things to look out for when you are either a seller or a buyer in the process.

Real Estate – Shared Equity

Shared equity is an innovative form of joint mortgage/joint ownership the government promotes to help the ones who are first-time property buyers. It includes many features that are attractive to a buyer so that he can materialize his dream of owning a new house.

Shared Equity Scheme

The shared equity scheme is launched because of the struggles of the first time buyers become a major political issue in the recent past and it is estimated that the scheme will create an extra 100,000 homeowners in the UK alone by 2010. The major attraction of the scheme is that the buyers could take a 75% mortgage and the remaining part of it will be covered by an equity loan from the government and the lender. This way the buyer gets to save a significant sum on his investment. People will find it quite easy and convenient so that he does not have to go for other alternatives that may be tricky and confusing.

The Chief Features

The shared equity envisages that the first time buyer of the property does not own it in conjunction with any other party as against in the case of shared ownership. At the same time, the scheme takes out more than one loan for the property – an equity loan and a mortgage. There is not going to be any co-owner of the property and you are the sole person on the deeds; however, if the property is to be sold, then the property buyer has to repay all the loans and he has to pay a proportion of the increase in the equity of the property (if there is any) to the party who is making the equity loan. One of the major features of the shared equity scheme is that there is much flexibility and ease to implement it so that the person who is going to buy will be quite relieved at the prospect of a great help from the part of the government.

In certain countries, one of the initiatives was termed as the Open Market Home Buy Scheme and it allows the prospective buyer to choose any property from the open market that comes within their range. The scheme is available to all the key public sector workers, the ones who are on a council waiting list, social tenants and other priority first time buyers that include the ones with a household income of 65,000 pounds or less. There are similar projects in the United States as well and the aim of the project is to revitalize the housing sector by making real estate investments affordable.

Conclusion

The shared equity scheme is quite different from the mortgage loans and the processes and procedures involved in it help the buyer in general and the materialization of the wishes of the buyer, especially the first time buyer, come true. It is a great option for anyone looking to own a real estate property at an affordable rate.

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