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Home Equity Loan Scams To Avoid

Home Equity Loan Scams You Should Avoid – By Home Equity Loans Editor

When people need money to cover up big expenses like home improvement, school tuition fees, medical needs, or paying for other real property, they tend to apply for loans against their home equity. It is the most practical solution for a big problem. Your home is there and will probably one of the biggest assets that you will have. Since it is recognized as an asset, opportunities for all kinds of home equity loans and home equity lines of credit will open up to you.

Unfortunately, you will also be faced with a lot of scams that you may have to identify and avoid. There are many lenders today who will try their best to strip you of your home equity, all because you are ready to take on a loan in desperation. Even if it is a time of desperation, it is always advisable to consult lawyers and other experts on the matter so that you are well guided on which home equity refinancing is legitimate and which is not. Here are just some illegitimate equity home loan schemes that you may come across and take all measures to avoid:

The home improvement loan – this loan takes on the guise of home improvement at the most convenience to you. You may be looking for ways to do home improvement and it will come to you like a godsend through a contractor who will offer you an opportunity to do home improvement while you get a corresponding loan through a small loans lender he knows. If you agree to the home improvement project, he will start on the work and will refuse to continue all of a sudden if you do not sign the loan papers.

Thinking it is just a small loan you can afford you go ahead and sign the papers without really reading the fine print. At the end of it all you find out that you have signed over your home equity to a home equity loan! In addition, once you have signed it, the contractor may not even do such a great job with the home improvement you contracted him to do.

Deed stealer – If your home is close to getting foreclosed, you might just do anything to save it from being taken by the bank, even if it means signing the deed over to a third person so that they can’t get a hold of it. This is yet another way a lender will scam you. He may offer you a way out by offering a home equity loan that you can manage, but he requests you sign the deed over to him first as a temporary measure to prevent it from being taken by the bank. It will end up that the lender will start treating you as a tenant on your own land and you just might never get your deed back and lose your property to him altogether.

Bulk principal payment – If you fail to make mortgage payments and you are about to lose your home to the bank, a lender may offer you a home equity loan that entails low monthly payments that you can afford. Beware because it may end up that you will only be paying the interest rate with the low monthly payments and when it comes time for you to pay the principal amount, you will be charged to pay it in full, which you will obviously not be able to afford. Thus, you lose your home to the second lender.

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