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Additional Tips and Considerations

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The following are just a few things to keep in mind when considering a home equity loan:

• Fraud of any kind negatively affects the real estate market. It increases distrust between buyers and realtors and buyers and mortgage providers. It is one of the causes for increasing rates. And it creates artificial property values that can undermine any housing market. If you’re asked to participate in any of these mortgage schemes, DON’T DO IT! And if you know a mortgage bandit, report them.
• The Federal Trade Commission warns consumers that they may be agreeing to something that is potentially dangerous if their lender:
o Encourages you to provide fraudulent information of the loan application.
o Entices you to borrow more than you actually need.
o Attempts to push you into a payment you can’t afford.
o Doesn’t freely give you the required disclosures (i.e., APR, right to rescind, etc.).
o Tries to close your loan with a completely different product than what you choose.
o Tries to have you sign blank or incomplete forms.
o Refuses to give you copies of the documents you just signed.
• Demand that the lender supply you with an explanation of any cost, term or condition you don't comprehend. Federal law is very clear about what information must be provided in writing when you apply for a loan and before you sign any agreement.
• Never agree to a home equity loan if you can’t afford the payments.
• The Truth in Lending Act gives you the right to cancel certain real estate loans within three business days without suffering a penalty. In the case of home equity loans you can cancel only if you are using your principal residence as collateral. You must deliver a notice in writing before midnight of the third day.
• Keep some equity available for emergencies.
• Talk with several lenders before deciding on a loan. Be sure you are getting a reputable lender and the best deal possible.

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