When Not To Agree To A Home Equity Loan

Before you borrow money on your home's equity, think twice so you don't end up paying more than you expected.

According to the Federal Trade Commission, homeowners-particularly elderly, minority and those with low incomes or poor credit should be careful when borrowing money based on their home equity. Certain abusive or exploitative lenders target these borrowers, who unwittingly may be putting their home on the line. Abusive lending practices range from equity stripping and loan flipping to hiding loan terms and packing a loan with extra charges.

When not to agree to a home equity loan:

- If you don't have enough income to make the monthly payments.

- If the loan terms are incredibly unfavorable to you, with enormous up-front costs and high interest rates (sometimes exceeding 50 percent).

- If there are discrepancies between the promised or stated interest rate and the annual percentage rate (APR) figure required in all consumer loan contracts (Truth in Lending). If that figure is significantly higher than the rate stated in the contract, the loan contains hidden interest charges.

- If you can't determine who the lender is. A lender could be nothing more than a few individuals in for a quick score. Does the agent have an office? Is the company an old and established one with community ties?

- If you haven't read or if you don't understand the loan terms or you're being pressured into signing the loan document.

- If the loan includes extra products you don't want.

What to do before you Agree to a home equity loan:

Have a financial adviser such as an attorney or accountant review all papers before signing anything. Paperwork for a loan contract is often technical and unclear. Read all items carefully. If you need an explanation of any terms or conditions, talk to someone you can trust, such as a knowledgeable family member or an attorney. Keep careful records of what you've paid, including billing statements and cancelled checks. Consider all the costs of financing before you agree to a loan.

Copyright © 2005. Chileshe Mwape writes for the Banking News Website at: http://www.banking-news.org.uk/ which offers informative articles about banking, mortgages and loans.

This article may be reprinted as long as all the above links are active and clickable.

---

Home Mortgage Lenders - How to Find A Good Mortgage Broker Online

Mortgage lenders have set up shop online, but they aren't... Read More

Consolidate Your Debt With a Home Equity Loan and Improve Your Credit Score

A home equity loan is a loan based on the... Read More

Mortgage after Bankruptcy - Bankruptcy Discharged Yesterday? Purchase a Home Today!

So you have been through a bankruptcy and surely have... Read More

Consolidate Debt With A Home Equity Loan

If you are a home owner who is having to... Read More

Poor Credit Mortgage Reigns High Among Mortgages Available to Bad Credit Borrowers

Like a big brother keeping notes of the erring behaviour... Read More

5 Steps to Getting on Top of your Mortgage

Getting on top of your mortgage so you can pay... Read More

Little Known Secret: Eliminate your Mortgage in 23 years or less!

Wanna know a little secret? There is an ingenious method... Read More

Home Loan Lenders - Finding the Best Home Mortgage Lender

The process of obtaining a mortgage or home loan can... Read More

Online Mortgage in UK - Introducing the Best Mortgage Plan Across UK

Add the term 'online' and it will open for you... Read More

Home Loans for Credit Challenged Borrowers

Just because you have negative items on your credit report... Read More

The Real Truth About Those: Online Get a Better Loan Web Sites - 6 Things to Look For

You have seen the Commercials on TV go this or... Read More

This Secret Weapon Will Eanble You To Close Up To 200% more Home Remodel Sales

Many Homeowners are not aware of all the options that... Read More

5 Home Buying Essentials

Purchasing a home involves certain important, even essential, steps that... Read More

Mortgages After Bankruptcy: Easier Than You Would Expect

Give yourself time to rebound. Whether you had to turn... Read More

What is a Self-Certification Mortgage?

A Self-Certification mortgage is a mortgage designed for people who... Read More

Multi Family Property Living

While most multi family properties are designed to allow the... Read More

A Guide to UK Buy to Let Mortgages

Essentially there is little difference between the process that one... Read More

FHA Mortgage: When Your Downpayment is a Gift

There has been so much fraud discovered in the FHA... Read More

Mortgage ? What, Why, When, and How?

What is a mortgage? Here's what The New Merriam ?... Read More

A Guide to Direct Homeowner Loans

Are you considering applying for direct homeowner loans? Perhaps you're... Read More

Home Equity Loans ? Research Your Lender Carefully

Real estate prices are rising across the country, and Americans... Read More

Reverse Mortgages ? a Reversal of the Mortgage Process

Mortgages have assumed a number of characters from the time... Read More

Home Equity Loans Online

If you are in the market for a home equity... Read More

Refinance Your Home Equity Loan

Refinancing your home equity loan is an excellent way to... Read More

Buying a Home when Rates go Up

Many people fret the rising tide of interest rates. You'll... Read More

Securing a US Commercial Mortgage

What's the most efficient way to secure a US Commercial... Read More

Home Mortgages: Does It Ever Make Sense to Pay Points?

Interest rates on home mortgages are often quoted with and... Read More

Bad Credit Home Loan - Apply Online and Keep Your Credit Score as High as Possible

If you have a poor or bad credit history with... Read More

Homeowner Loans ? Drawing Lessons of the Past

Loans are not of a recent origin. People used to... Read More

Option One Mortgage Loans ? Getting an Option ARM or Option One Mortgage Loan

Have you heard about or been interested in finding out... Read More

What is a Commercial Mortgage?

A commercial mortgage is a loan that uses commercial property... Read More

Home Equity Loans Can Provide Cash in a Hurry

Think About the Long Term. Estimate how long you expect... Read More

How to Shop Around for the Cheapest Mortgage Deal Online

Before you start shopping around for a mortgage, you need... Read More