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Home Equity Loans

"People borrow on their homes for many reasons - to make repairs or improvements, to consolidate debts, to pay off medical bills, or something else."

Home Equity Loans: Compare Terms Carefully

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Before you borrow money on your home's equity, think twice so you don't end up paying more than you expected. People borrow on their homes for many reasons - to make repairs or improvements, to consolidate debts, to pay off medical bills, or something else. Sometimes there may be benefits to using your home equity when you borrow. But if the loan costs too much, the benefits disappear ...

Remember: Get the facts before a bad loan gets you.

Sometimes a home equity loan is a good way to borrow money, but there are some lenders that only bring problems. Once they find these people, the lenders often use high pressure sales talk, high interest rates, outrageous fees, and repayment terms that the person can't afford. Fast talkers can trick homeowners into taking out loans that they can't afford to pay back. Whether you have excellent credit or not-so good credit, you want the best possible loan you can get.

Getting your credit report and credit score may help you negotiate the best loan for you so you don't pay more than you should have to pay. Loan offers may tell you how you can save money by paying off credit cards with a home equity loan, but what they don't say is that your home is at risk if you do it. Yes, sometimes this type of loan is useful, but only if the loan's terms are very good-and you won't run up another credit card bill. Even then, if something should happen and you can't make the home equity payment, your home is at risk of foreclosure.

Things to remember:

  • Get several offers and pick the loan that's best for you - not one that is best for the lender or broker.
  • Start with several banks, savings and loans, credit unions, and mortgage companies.
  • Brokers charge you to find a lender; they don't lend the money themselves.
  • Some lenders also pay the broker and then pass their cost on to you as a higher interest rate.
  • Ask a lawyer, housing counselor, or a trusted friend to help you go over the papers.
  • If you are planning on making repairs or improvements to your home, it is important to pick the right contractor and the right financing.
  • You can cancel the financing by sending a letter within three business days, and maybe even later, if your home is used as security for the loan.
  • If you think your contractor or lender is fraudulent, notify the police, the local consumer protection agency, your state Attorney General, and state/city office of banking. You may be able to sue the contractor or lender using state or federal laws.
  • If you compare at least three lenders for borrowing the same amount, you may find a better deal.

Note: This article was submitted by a second party and the contents are subject to our disclaimer.

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