When you want to borrow money to finance your home improvement projects you should be careful about the harmful practices of home equity so that you do not end up in further debt and manage your home improvement debt effectively. Otherwise, you could end up borrowing from unscrupulous lenders and could even lose your home along with the money. This can happen especially if you are old, have low income, struggling with debt already and have problems in your credibility. Therefore, while taking a loan for your home improvement projects, you should be careful and be on the lookout for specific malpractices.
Home Improvement Loan
Take care when you come across a person or a contractor who comes forward to you showing interest to remodel your kitchen at a price which is too good to be true. When you say that you cannot afford, the contractor might suggest a few names that are ready to fiancé for your project and you agree, take care that you are not made to sign a lot of papers in the middle of the project. It often happens you are made to sign blank papers or rushed to sign it without reading what is written in it. You have to as the contractor would threaten to leave the job midway only to realize later that you signed on a home equity loan papers.
Also Look Out For
The rate of the interest, the fees and the points may be very high and you should take care of. Take care that the work is done properly and to your satisfaction and the contractor takes similar interest in it as before. Apart from that you should look for loan flipping when the lender asks to refinance repeatedly, and thereby increasing the fees and interest points which leads you to further debt. Strictly try not to include any credit or other insurance along with the loan which is unnecessary and also do not give in to bait and switch practices.
Non-Traditional Products And Equity Stripping
Consider your ability to repay the home equity loan back while taking it, which the lenders would cunningly forget to remind you, as when you fail to repay you might end up losing your home. If you are offered with other non-traditional products to finance your home improvement projects you should not be overwhelmed and sign before considering the pros and cons. Loans in which minimum payments are too low, loans with variable rate of interest, loans with large lump sum balloon payment in the end should be taken care of precisely.
Abuses Of Mortgage Servicing
Take care when the lender charges improper fees, late fees which are not included in mortgage law, fess for insurance that is placed by the lender, lack of proper and complete statements of accounts, suppression of payoff amounts, all could result in more payment from your side. Discrimination based on age, caste, nationality, disclosure violation is all punishable under law and you could file a lawsuit even. To avoid all such stresses you should take a loan from a bank directly knowing that you can get debt consolidation loans for bad credit in case you have difficulty in paying back.