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Home Equity Loans – Research Your Lender Carefully
By: Charles Essmeier
Real estate prices are rising across the country, and Americans are tapping into
their home equity like never before. Americans took out $431 billion in home
equity loans in 2004, and that amount may increase in 2005. The reasons vary;
some are using the money for home improvement, others are using the money to buy
real estate, and some are taking reverse mortgages in order to enjoy a better
retirement. With interest rates still near historic lows and the bull real
estate market continuing, more and more predatory lenders are entering the
lending profession.
Most lenders are honest, and prospective borrowers will probably not have any
problems resulting from taking out a loan with a national bank. On the other
hand, newer, smaller, and less honest lenders are advertising aggressively and
may grab your attention by offering terms that seem more favorable than those
offered by the larger banks. Sometimes, these terms sound too good to be true,
and they often are. Here are a few things to watch out for when taking out a
home loan:
# A promised low interest rate “disappears”, only to be replaced with a higher
figure on the contract at closing time. The borrowers, who expected to close
right then and there, feel pressured to sign and often accept the higher
interest rate.
# Previously unmentioned fees turn up on the application at closing. Again, by
presenting these previously undisclosed fees at closing time, the borrower is
pressured to sign.
# Blanks on the application form. It’s hard to believe that a lender would
present a blank form and assure the borrower that the blanks will be filled in
later, but this actually happens, and borrowers actually sign such deals.
Remember, your signature on the form constitutes your agreement to the terms,
even if the terms are filled in later.
These problems can be avoided by taking a few simple precautionary steps. Ask
about the total fees and interest rates ahead of time. Inform your lender that
you fully expect to see those same figures on the documents at closing, and make
it clear that you will not sign documents that state otherwise. Make certain
that you have provided honest information to the lender. Refuse to sign any
blank documents. These things may seem obvious, but when closing approaches,
borrowers tend to get in a hurry, as they are eager to get the closing out of
the way. Borrowing against your home is not something to take lightly; you can
lose your home if you unknowingly sign a predatory document. Take your time.
About the Author:
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro
Marketing, a firm devoted to informational Websites, including
http://www.End-Your-Debt.com ,
a Website devoted to debt consolidation information and
http://www.HomeEquityHelp.net,
a site devoted to information on home equity loans. |
