|
Home Equity Loan – Beware of the lingering
lien!
by Charles Essmeier
A problem that often arises when people try to refinance their home is the
discovery of a pre-existing lien from a previous loan that was not removed by
the lending company. The cost of removing a lien and returning the title to the
homeowner, a process known as reconveyance, is usually included in fees
associated with a home equity loan. When the loan is paid off, the lender is
generally responsible for removing the lien, so that public records show the
property to be unencumbered. There are various reasons for why the lien isn’t
always removed – oversight on the part of the lender, especially during heavy
periods of refinancing, is often the problem.
Occasionally, the problem can arise when a lender is sold to another company or
when that lender goes out of business. No matter what the cause, a lien that
hasn’t been removed can come back to haunt a homeowner. If a homeowner is in the
process of refinancing a home and discovers an old lien that hasn’t been
removed, the entire refinancing process can be held up for weeks. This can be
critical if the owner is trying to lock in an interest rate prior to closing.
The problem can also arise when a homeowner is trying to take out another home
equity loan, perhaps to facilitate debt consolidation or home improvements. Here
are a few things you can do to avoid this problem: Get a copy of your credit
report. If there are any errors, particularly errors showing an open line of
credit or a home equity loan that has been paid off, contact your lender. Keep
your paperwork from all real estate loans, even if you have already paid them
off.
Then you will have them at hand should you need to demonstrate that you have
fulfilled your obligations. If the lien shows up on public records or a credit
report, but the original lender says that you have paid it, have them send you a
copy of their documentation regarding your reconveyance.
As with most issues that come up when financing or refinancing a home, this one
can be resolved by remaining diligent and keeping proper paperwork. As always,
it’s a good idea to check your credit report regularly, particularly if you plan
on taking out a loan in the near future.
©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro
Marketing, a firm devoted to informational Websites, including End-Your-Debt.com,
a Website devoted to debt consolidation information and HomeEquityHelp.net, a
site devoted to information on home equity loans.
This article is reprinted with permission from www.WritingCareer.com |
