Beware of These Scams Targeting New Homeowners

Buying a home can be like running a marathon or triathlon. You’ve spent months hunting for the right property, convincing someone you’re responsible enough to borrow an incredible amount of money , and overcoming a slew of scams designed to rob you of even more money. Now that you’ve bought a property and moved in, you’re free from scams, right? Probably no. Actually, definitely not.

Every aspect of the real estate transaction you just made is in the public domain , and you can expect scammers to surround you with all sorts of fraudulent attempts to steal your money, and sometimes literally steal your home. Here are the top scams you should be wary of after you’ve bought a home.

Housing Guarantee Fraud

Home guarantees are not a scam in and of themselves – many legitimate companies offer home guarantee programs, and a home guarantee can fill the gap left by home insurance, which usually doesn’t cover accidents and broken appliances. But after you’ve moved into your new home, you may receive official letters marked URGENT and URGENT regarding your home warranty , whether or not you actually have one. The language of these letters varies: sometimes they imply that you must purchase home warranty protection, sometimes they state that you already have a warranty (or that the previous owners had a warranty that was expiring), but you must pay the insurance premium immediately. Often these emails come on official letterhead, and because your home purchase is public information, it often mentions your creditor and other details to convince you it’s legal.

All this is not true. You are never required to purchase a home warranty, and if you want one, you should always do some research and contact reputable companies. All those URGENT letters? You can throw it in the trash.

Utility Fraud

This is a scam that can be repeated over and over once you settle into your new home. Someone in a uniform and/or some kind of badge may come to your door claiming to represent your utility company and tell you that you are having problems with your account. They will ask you to see your most recent account to confirm the information, or they may just ask for your account details. In any case, once they get your account information, they will switch your electricity and gas supplier – often to a dubious company that charges much more for both. You can always change them back, but you may not have enough money if you don’t notice it for a few months.

“Partner companies”

Shortly after your new home closes, you may receive a letter from a company claiming to be a “partner company” associated with your mortgage lender. The letter will state that they need more information to finalize the terms of your loan, and that failure to provide these details may result in the loan being voided. This is terrible, and the legitimacy of the letter is confirmed by the inclusion of your credit details.

However, this is a scam. If you are sitting in your new home, your loan has been processed at closing and your lender has all the information they need from you. If you are at all unsure about something like this, your best bet is to contact your lender rather than the “partner company” and just ask them.

Loan Fraud

Refinancing your mortgage can be a great idea when interest rates are down or you have a lot of capital accumulated in a property and want to cash out some of it. But be wary of companies that encourage you to refinance shortly after your home closes, or that encourage you to refinance. They often seek to make money from the exorbitant fees on these loans and may burden you with a much higher interest rate than you currently have. It’s always better to research the best refinance lender instead of cold calling or mailing.

Another scam you may encounter is when a company contacts you and tries to change aspects of your mortgage. For example, a company might offer to set up bi-weekly payments in exchange for a commission. Biweekly payments are a good idea: they split your monthly mortgage payment in half, meaning you painlessly make your thirteenth payment each year, allowing you to pay off your loan faster. But for this you do not need anyone’s help – just contact your lender. Or, you may receive a legitimate-looking letter informing you that your mortgage has been transferred to a new lender and directing you to send your mortgage payments to your new destination. This is easy to believe because mortgages are often sold to other lenders, but in this case your current lender will tell you, not some shady third party company.

Rental fraud

In this scam, you are not technically the victim financially, but you will suffer in other ways. Basically, the scammer will remove all photos and description text from your new home’s listing, create a fake rental listing using the information, and rent your home to an unsuspecting person. Sometimes they even schedule screenings that are canceled at the last minute, just to reinforce the illusion. Once they get bail and a few months’ rent, they disappear and you’re left to deal with angry and confused people who thought they rented your house or apartment. If you don’t permanently reside on the property (for example, if it’s a vacation home), you may even have to step into the law and evict the people who actually lived in your home !

This is hard to defend against, but there are a few steps you can take:

• Ask your real estate agent to remove the listing after you close the property.
• Do a few quick Internet searches for your address within a few months of moving in, looking for fake listings.
• If you’re going to be away from the property for an extended period of time, hire someone to watch the house or check the property regularly to make sure no one is impersonating the owner.

Title theft

One of the most insidious scams that can hit a new homeowner is title scam. This includes a fake deed to your property that is used to transfer title to someone else’s name. They then use their “ownership” of your home to take out loans that they don’t pay back. Worst of all, you may not even be aware of this process as it unfolds — at least until your home is foreclosed by a lender you’ve never heard of.

There are only three things you can do to prevent this kind of scam :

• Do not ignore the mail that comes to your home with someone else’s name. This may seem like nothing more than an annoyance, but it could mean that someone is claiming ownership of your home.
• Check property records with your local municipality at least once a year. It won’t take long, although there may be a small processing fee.
• Property theft is often part of a larger identity theft scam, so following best practices to protect your personal information is a good cornerstone to prevent it.

Tax cut scammers

After buying a home, you will often receive letters from companies claiming that they can help reduce your tax burden. They will cite new laws or special programs for new buyers and offer to drastically cut property taxes in exchange for a fee. Often these scams mention probate exemption , which is a real thing in many states and reduces taxes on the property you actually live in (instead of the home you rent or just invest in).

The truth is, if these tax cut opportunities are real, it’s very easy to file them yourself – you don’t need someone else to do it for you. Often the forms involved are a single page that can be downloaded from the internet and submitted for free.

“We buy houses”

Finally, after you own your home for a while, you can start getting offers from people who claim to buy homes quickly and for cash. The temptation here is a quick withdrawal of money without waiting and paperwork. This is especially tempting if you’re struggling to cover your mortgage or some other life situation is pushing you to move as soon as possible.

Many of these scammers aren’t actually buying your home – they’re trying to convince you to rent it out, instead promising big streams of income. What happens then is that you move out, but you are still responsible for mortgage payments and property maintenance, and you receive little real income from the transaction. Or, in some cases, you are simply forced to sign a document before you get paid to make the deal easier. Once the scammer has the document, he doesn’t need you and he doesn’t need to pay you anymore.

Buying a home is a stressful process, but once you close it, it should be a joyful experience. Just keep in mind that attempts to swindle money and property from you do not stop just because the mortgage process is completed.