Home Equity Loans - The 3 Deadly Sins of Bad Lenders
Written by: Ron Treveli
You've heard of 'The 7 Deadly Sins', well here's a bit of a spin, but the consequences can be severe if you don't take these into consideration, or keep your eyes open for lenders who could possibly be doing this.
Now, there are other more varied approaches that lenders can take, but I'd like to make you aware of the 3 more common ones.
1. When NOT To Sign Over Your Deed
Ok, here's the situation, you're having trouble paying your monthly payments with your current lender. They've stepped up the game and have gone as far as to threaten foreclosure on your home.
Worried, and not sure what to do, another lender approaches you, and offers to help you out by refinancing and helping you out in your 'predicament'. But, because he can help you, he say's as part of the formality, he needs you to assign your deed over to him, saying something like it will mean that your current lender will not be able to foreclose.
DO NOT DO THIS! Once the lender has your deed, the financing will likely not come through, and you'll be left in a home you no longer own. The lender can then almost do whatever he wants, and will treat you as a tenant, not as an owner.
2. When NOT To Draw Down On Your Equity
You're in need of some money. maybe you've hit some medical bills that weren't expected. You've successfully built up a considerable amount of equity in your home over the years, and think that you'd like to use that.
A lender approaches you, and says they can do it, but even though you won't be able to afford the higher monthly payments, they tell you to "just bump up your income a little" to make it get through, then worry about it after.
The problem with this is that you'll likely lose your home. I'm not kidding, lenders like this don't care if you can't make the monthly payments, if you default, then they'll just take your home and sell it and pocket the difference. Stay CLEAR of these people.
3. The Hidden Balloon Payment Clause
If you're pressed for payments, and want to refinance, make sure you read the fine print of the contract. A lender might come to you and say that they can reduce your monthly payments and save you from foreclosure. That might be well and good, but in the fine print, you might find something that says that the balance of the principal amount is due at the END of the loan in one lump some payment.
If this is the case, be VERY careful, and don't do this, you'll likely face foreclosure anyway at the end of that loan.
I hope that this guide has been helpful for you, and opened your eyes to some possibilities that are out there.
About The Author
Thanks for taking the time to read this article. For more quality articles by Ron Treveli on Home Equity Loans be sure to visit www.home-equity-loan-guides.com where i'm constantly adding more content specifically on home equity loans.
Secured Personal Loans - What you need to know about?
Each one of us needs money to fulfill our personal needs. It
could be to buy a dream car or to go out for a luxurious
holiday. Do you know you can use equity in your home to get a
loan? Yes, it's true. Secured personal loans are tailored to
Don't Let The Depreciation On Your Motorcycle Affect Your Motorcycle Loan
The depreciation on new motorcycles can be very quick as soon as
you dive it away from the showroom. As a result, as a motorcycle
buyer entering a loan agreement you should look for a motorcycle
that is in high demand and will have less...read more
Student Loan Consolidation
Student loan consolidation is one of the most used methods for reducing and working off student debt. If you want to consolidate debt, whether itís a student loan debt or not, you have to follow a certain process. However, this process is easy to...read more
Return to Home