Don’t recognize that $500 charge on your statement for Simon’s House of Silly Putty? Call your bank or card issuer ASAP to report the fraudulent charges. (Just be sure to examine your statement carefully prior to calling so that you can run through all the suspicious charges at once.) Your liability and next steps depend on whether the charge was made on a credit or debit card:
If it was made to a credit card…
Under the Fair Credit Billing Act, your losses from fraud on a credit card are capped at $50. But if your credit card number was stolen, but not the actual card, you are not liable at all for unauthorized use; any fraudulent credit charges are usually credited back to your account immediately after they’re reported.
If the rep you speak with doesn’t suggest it, definitely ask for a new card with new account numbers.
If it was made to a debit card…
You can be subject to greater liability: Your loss is limited to $50 if you notify your financial institution within two business days of learning of the theft. Your liability then jumps to $500 until 60 days after your account statement is mailed, and after that it’s not capped at all. That said, most financial institutions do not hold debit card users to this liability, instead treating them like credit card theft victims. There’s no guarantee of this, however.
Also, bear in mind that you could also face tighter money constraints resulting from a debit card theft, since the money is withdrawn directly from your account and it can take up to two weeks for the bank to investigate.
Next steps depend on how deep the thief got. If you think only your debt card number was compromised, have the bank cancel the card, and change your PIN. If the fraudsters also have your bank account number, close the account and open a new one with a new number.
In either case….
“If the card issuer agrees to remove a false change, make sure to check back that it has actually been removed or that the money has been reimbursed,” says Neal O’Farrell, executive director of The Identity Theft Council.
Also be sure to inform any companies you pay automatically through your credit or debit card about the change to avoid owing fees or having your service suspended.
- MORTGAGE REFINANCE
- The Pros and Cons of Switching Lenders When You Refinance Your Mortgage
The Pros and Cons of Switching Lenders When You Refinance Your Mortgage
If you’re thinking about refinancing your home loan, consider switching to a new mortgage lender.
“Lender allegiance can backfire if you don’t shop around to see if there are better rates,” says Heather McRae, a senior loan officer at Chicago Financial Services. That’s especially true in today’s refi market, where lenders are aggressively competing to woo customers.
According to a Black Knight report, lender retention is at an all-time low. Mortgage servicers (read: the company that collects your mortgage payment) retained just 18% of the estimated 2.8 million homeowners who refinanced in the fourth quarter of 2020, the lowest share on record.
Here are the benefits and drawbacks of changing lenders when you refinance your mortgage.
Pro: You may snag a better mortgage rate
It never hurts to shop around, says David Mele, president of Homes.com. “A lot of borrowers stay with their lender when refinancing because they’re familiar with them, but you always want to compare quotes to make sure you’re getting the best deal,” says Mele. “If your account is in good standing, you may be able to get the lowest refi rate with your current lender, but different lenders have different lending requirements.”
However, you don’t have to talk to every lender in town. McRae suggests getting quotes from three lenders when surveying your options. “I talked to [a refinancer] recently who spoke to 11 different mortgage lenders and that’s just totally unnecessary,” she says. “You’re not going to get dramatically different offers by going to a ton of lenders.”
If your current loan servicer issues mortgage refis (some don’t), McRae recommends getting a quote from them — but be prepared to provide a healthy stack of paperwork. “A lot of people falsely believe the application process is easier if they stay with their loan servicer, but in general you’re going to have to provide the same information and documentation to your servicer that you would to a new lender,” she says.
Con: You don’t know how a new lender treats its customers
If you’ve developed a good relationship with your lender, that’s no small thing. “Having someone you trust with your money is invaluable, and your home is probably the largest investment you have, so you want to make sure you have confidence in the lender that you’re working with,” says Todd Sheinin, chief operating officer at Homespire Mortgage in Gaithersburg, Md. “Some lenders treat their clients better than others.”
Reflect on your experience with your current lender. Sheinin recommends considering questions like: “Were you kept informed of everything that was happening with your mortgage? Do you feel like you had your loan officer’s full attention? Did you get a great rate? Has your lender kept in touch?”
Having a responsive lender is especially important when things go wrong — say, if you need help applying for mortgage forbearance(borrowers with government-backed FHA loans, VA loans or USDA loans can enroll in forbearance plans, which puts their mortgage payments on pause, through June 30) or need a loan modification.
Pro: You may get lower closing costs
Closing fees for refinancing typically cost 2% to 5% of your new loan amount — on a $300,000 balance, that’s $6,000 to $15,000, since some lenders charge higher fees for home appraisals, title searches, and other services. Therefore, a different lender may offer you lower closing costs than your original lender.
That being said, some lenders “will be willing to give a current and good client a discount on closing costs to keep them as a client,” Sheinin says. Depending on the lender, they could offer a reduction of a few hundred dollars to about $1,000 in lower closing fees.
One caveat: “I always tell people to be cautious when a lender offers a ‘credit’ to cover some or all of the closing costs,” McRae says. “That almost always means a lower interest rate was available.”
Want to lower your mortgage payments? Refinancing can help!
Take the first step toward refinancing your mortgage today by seeking out the priceless data you’ll need to get through the process. To find out more, click below.
Con: You may get slapped with a prepayment penalty
Although prepayment penalties have become less common, some lenders still charge borrowers a fee for paying their mortgage off before their loan term ends. Prepayment penalty costs can vary widely. Some lenders charge customers a percentage (usually 2% to 3%) of their outstanding principal, while others calculate prepayment fees based on how much interest the borrower would pay on their loan for a certain number of months (typically six months).
Look for the term “prepayment disclosure” in your mortgage agreement to see if your lender charges a prepayment penalty and, if so, how much it costs.
The bottom line
You’re not required to refinance with your original lender, but whether it makes sense to switch to a different one depends on your priorities as well as what rate and terms you can qualify for with a new lender. Need a little help whittling down your options? Check out Money’s list of Best Mortgage Refinance Companies of 2021.