For most of us, our home is our single greatest asset. Arranging a loan based on your home’s accrued equity can be risky. Abusive lending practices can range from equity stripping and loan flipping to hidden terms and extra charges.
Equity Stripping
Equity stripping or skimming is a form of predatory lending which can work like high cost, risky refinancing. Homeowners facing foreclosure may be promised cash, free rent and the possibility of retaining their home. The unscrupulous lender borrows as much as possible against the value of the house, and in the long run the homeowner ends up losing his home.
Hidden Terms
The lender agrees to refinance your mortgage and lower your monthly payment, saving you from foreclosure. Check for a balloon payment at the end. This may be the reason for the low monthly payment. The principle may be due in full at the end of the loan term.
Loan Flipping
You’ve lived in your home for a while and have built up equity, but you’d like to have more monthly cash to work with. A loan agent suggests refinancing. Be sure that you’re not charged higher points and fees each time you refinance. You may have a better cash flow, but your debt has been stretched over a longer period of time.
Mandatory Arbitration
Check for this clause. Hidden in the fine print, lenders will state that it is illegal for the borrower to take legal action against the lender. By signing such a document, you have given up your rights to sue.
Tips
Don’t sign a home equity loan if you don’t have the monthly income.
Read all items carefully and ask questions.
Consult an attorney before you deed your property to someone else.
Don’t let anyone pressure you during the loan process.
Keep careful records of all payments.
Home Refinancing News;
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More Arizonans can refinance for underwater … – Rose Law Group – “Rose Law Group, specifically Carolyn Oberholtzer played a key role in guiding the team through this process. Her knowledge and relationship with staff and elected officials were instrumental in these successes and are greatly appreciated. Rose Law Reporter is a daily news service covering renewable energy, the market,Immigration issues, real estate, development, employment law, Arizona politics and other topics.
- I want to refinance my home for a debt consolidation new loan … – I have about 40 % positive home equity, no late payments, but I only have been owning the house for a couple months. My house is in California and I have a honest to excellent credit with too many inquiries in the last 6 months. It depends on how you have this equity.
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Stimulus Offer to Refinance Wells Fargo Bank Loans – Mortgage … – You will desire to submit the explanations for your hardship, the terms and situations of your recent mortgage (for refinancing functions), a listing of expenditures and cash flow, (including all credit debts, financial institution statements), and the specific financial debt-to-cash flow ratio that breaks down what your financial debt is in comparison with your revenue. When applying for a method, do your analysis forward of time and be acquainted with all of your financial details so that you can accurately response the bank’s thoughts and preserve time on their piece and yours. Allow the lender see that this is a priority for you, so they can make it theirs as clearly.
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