Beware of Abusive Lenders

The alarm bell is ringing for the home equity loan borrowers amidst the reports that home equity scams are increasing day by day. If you have your own home, then there is no doubt that it is your greatest single asset. If you if you agree to a loan that's based on the equity you have in your home, you may be putting your most valuable asset at risk. The solution: homeowners with low incomes or poor credit scores must be careful while borrowing money based on their home equity. Certain lenders tend to target such type of borrowers.

If you fall behind in your mortgage payments and face foreclosure, another lender might offer to save you from foreclosure by refinancing your mortgage and lowering your monthly payments. Before accepting the loan, look carefully at the loan terms. The payment may be lower because you repay only the interest each month. However, at the end of the loan term, the principal will be due in one lump sum. If you fail to pay that, you will lose your home.