Don't fall for these mortgage refi scams

All the talk recently about the possibility of the Federal Reserve hiking interest rates prompted a warning on Tuesday from the Better Business Bureau to homeowners considering refinancing their homes.

When you get the pitch -- it could come by email, phone or even a printed flyer -- it's going to come with a promise that refinancing will lead to a savings of several hundred dollars a month on mortgage payments. Other versions of the scam aim at those behind on their payments or who owe more than their property is worth, the BBB said.

"There's one big catch. The 'company' needs you to pay (an upfront fee) in order to lock in your rate, sometimes as much as thousands of dollars," according to the BBB. "Once you hand over the payment, the 'company' vanishes with your money."

A request for a homeowner to pay a fee before even applying for a loan is a big red flag.

Here are some other signs from the BBB to help identify a mortgage-related scam:

  • A claim that a company is affiliated with a government program. Appearing connected to the government, including using logos, is a way scam offers are made to look more credible.
  • Pressure to make a quick decision is a sign to head the other way. Watch out for terms including "act fast" or "limited time offer." They're signaling that you're likely dealing with a scam. Being forced to make a decision on the spot is a tactic to get consumers to make bad choices.
  • Being told to stop paying your mortgage is a recipe for disaster. Follow that advice, and your credit rating will take a big hit. Plus, you'll fall behind on your mortgage while handing your money to a crook.

Rather than consider an offer brought to you, go to your existing lender to see what opportunities might be available. If you also do some homework, you might find a refinancing deal from a legitimate lender that's worth pursuing.

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    Mitch Lipka is an award-winning consumer columnist. He was in charge of consumer news for AOL's personal finance site and was a senior editor at Consumer Reports. He was also a reporter for The Philadelphia Inquirer and the South Florida Sun-Sentinel, among other publications.