equity in your home may be your single greatest asset. Many people
have worked for years to own their homes “free and clear”.
In areas with high rates of real estate appreciation, these homeowners
may be “land rich, but cash poor.” This situation makes
the homeowner vulnerable to home equity loan fraud. Elderly and minority
homeowners seem to be targeted by fraudulent home equity loan practices.
equity loans allow the owner to borrow money against the home’s
equity. Equity is usually calculated by subtracting the amount owed
on the home from the estimated value of the home. The home is the
collateral that guarantees your loan. If you should be unable to repay
the loan, you could lose your home to foreclosure.
Actions recommends that you ask these questions before taking out
a home loan:
What is the total amount, including fees and interest, I will need
to pay off this loan?
is the annual percentage rate of interest (APR)? If it is at least
10 percentage points higher than rates on Treasury Securities of the
same maturity, you must be given more information and special protections.
Is the interest rate “fixed” or “adjustable”?
does the quoted rate compare with those of other lenders?
fees, points and closing costs will be added to the loan?
there a “balloon” payment?
much are my monthly payments and for how many months?
I really afford these loan payments?
I really need the repairs or improvements?
there be a prepayment penalty if I pay the loan off early or refinance
with another lender?