Borrowers Beware!

If you own a home, it is probably your biggest single asset. And a home equity loan puts a question mark on your possession. Agreed, you have only taken a loan and plan to repay it as soon as possible, but that doesn’t reduce your risk. Homeowners-particularly elderly, minority and those with low incomes or poor credit-should be careful when borrowing money based on their home equity.

That’s because certain abusive or exploitative lenders target these borrowers. Yes, you may think it’s only a loan, but you are probably being cheated of your money AND your home. Abusive lending practices range from equity stripping and loan flipping to hiding loan terms and packing a loan with extra charges. The Federal Trade Commission has urged people to be aware of these loan practices to avoid losing your home. Ftc.gov reports:

This lender may be out to steal the equity you have built up in your home. The lender doesn't care if you can't keep up with the monthly payments. As soon as you don't, the lender will foreclose-taking your home and stripping you of the equity you have spent years building. If you take out a loan but don't have enough income to make the monthly payments, you are being set up. You probably will lose your home.

Read more: Home Equity Loans: Borrowers Beware!