The biggest risk when buying or selling a house in Calgary is the risk of getting cheated. It’s shocking how people victim of mortgage frauds with such ease that the buyer or the lender is not aware until the time they are cheated. You might feel that catching a mortgage fraud is difficult. However, if you are aware of the common types of mortgage frauds, nobody can cheat you. To avoid mortgage fraud in Calgary, here are a few common types mortgage frauds you should be aware of.
False Income Fraud
You might be aware that to qualify for a mortgage, there are certain conditions. One such condition is having a steady income as it ensures timely payment of the installments. Often when people are presenting their income statements to the lender, they tend to show a higher income range compared to what they are actually earning. The purpose of this is to get a higher loan amount.
False Occupancy Fraud
When you apply for a mortgage, the interest charged by the lender is more if you are going to use the property for rental or investment purposes. The same is comparatively low if you are lending money for a residential property. Many home buyers falsely apply for mortgage stating that they will be residing in the house, to get lower interest rates. Also, other terms of the mortgage are lenient when it comes to occupancy.
Straw Buyers Fraud
Your credit score is the most important aspect when it comes to getting a mortgage approved. No lender will lend you money if you have a bad credit score. To work around this issue, home buyers with bad credit score make use of the identity of a person with a good credit score to get the mortgage approved. Generally, the person with good credit is someone who is making money from this process. Sometimes it is someone who himself is being conned by the buyer.
Deceitful Appraisal Fraud
Before applying for a mortgage, an appraiser is assigned by the seller to get the exact value of the house. Often people hire a dishonest appraiser who gives a false value of the house. Generally, the seller tries to overstate the value to make more money.
Illegal Home Flipping Fraud
This is one tricky fraud to catch. In this situation, a home buyer buys a home at a much cheaper rate due to the damages in the home. He then refurbishes the home and sells it at a better rate. While the renovation carried out might be a minor one, the homeowner tries to make extra money by overstating them.
You might not expect mortgage fraud to happen to you, but it is quite common and can happen to anyone. It’s better to be a smart home buyer or lender than to suffer. Knowledge about these frauds will help you avoid mortgage fraud in Calgary. However, having a real estate agent by your side will ensure that you do not get conned at all. Their expertise and their ability to verify everything at each step keep you safe from such frauds. So, if you plan to buy a new house and get a safe mortgage, hire one of our seasoned estate agents.