Home Equity Loans – Research Your Lender Carefully

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.

Source: http://www.isnare.com