The home equity industry is full of all sorts of fraud and forgery lenders and voracious lending scams. Deceiving customers is the focus of them and due to this reason, borrowers stepping in this business for the first time must be very careful. To aid borrowers and improve their bad finances, home equity loans and lines of credit work magnificently but some situations if unattended can easily lead to foreclosure if you don’t find the right lender and the right loan.
There are a lot of lenders or companies contacting people through their answering machines, mailboxes, phone calls or even visiting home and trying to lure customers. In such a situation, people who don’t have much knowledge about home equity loans may find themselves to be the next fraud victim.
Scams on home equity loans, which deceive people are countless. But a few of them, which are the most dangerous and which need to be avoided, are the following:
A) In this case lenders offer huge amounts to those borrowers who they know, can’t repay the amount. They accept whichever payment the borrower can make promising to extend the term but not giving written proof of this promise. Once the time period is over, they repossess the house and sell it again, thereby stripping away the home equity for their own profit. They target customers and pitch them on debt consolidation tools or to fund home repairs.
B) The second case is more complicated. These companies are one step ahead; they provide attractive offers to people. Their main aim is not to foreclose property but to refinance their customers’ mortgages. They nail on excessive fees of customers with each transaction and perpetually turn over those charges into the new mortgages, thus augmenting borrower debt load rather than reducing it. On top of this, greedy lenders often pack charges for credit life insurance, regular life insurance and other added services into the new mortgages.
Choose a Well-known Lender
Be careful while choosing the lender. In case you are hearing the name of the company for the first time, you have to be extra cautious. If they contacted you through telemarketing call or direct mailer, don’t rely on them unless you check all information yourself through other means. If possible, deal with a bank, credit union or other federally regulated institution. Else consider no-name brokerages only after studying the background through references and state licensing agencies, which tabs censured businesses and companies.
Don’t Go For The First Offer and Negotiate
Negotiating the market fees is the best policy for consumers to avoid getting scammed. In fact, home equity loans are mostly negotiable depending upon the broker you are dealing with. But in case of a bank or so, you may have to pay the set fees that apply to all transactions of a certain type. But when dealing with no traditional lenders, you can easily negotiate with them fee reductions and lower interest rates. Besides, you have nothing to lose if you try.
Sarah Dinkins is an Expert Loan Consultant in the financial industry that helps people to repair their credit and get approved for home loans, unsecured personal loans, student loans, consolidation loans, car loans and other types of loans and financial products. At http://www.badcreditfinancialexperts.com/article/ she is continually adding new finance articles useful for those in need of professional advice.