Dos and Don't's of Home Equity Loans

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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.

Watch out for lowered payments because there is a balloon payment at the end. Balloon payments are large lump payments due as the last payment. Don't do it!

Avoid home improvement scam that begin construction before any financing is settled.

Avoid pre-payment penalties. If you want to pay off your loan ahead of time, you should not pay a fee to do so. A 10% prepayment fee is not uncommon - but is a lot of money.

Avoid rate increases by avoiding missed or late payments.

These are some Do's And Don't's for home equity loans:

Don't agree to a home equity loan if you don't have enough income to make the monthly payments.

Don't sign any document you haven't read or any document that has blank spaces to be filled in after you sign or let anyone pressure you into signing any document.

Don't agree to a loan that includes credit insurance or extra products you don't want.

Don't let the promise of extra cash or lower monthly payments get in the way of your good judgment about whether the cost you will pay for the loan is really worth it.

Don't deed your property to anyone. First consult an attorney, a knowledgeable family member, or someone else you trust.

DO ask specifically if credit insurance is required as a condition of the loan. If it isn't, and a charge is included in your loan and you don't want the insurance, ask that the charge be removed from the loan documents. If you want the added security of credit insurance, shop around for the best rates.

DO keep careful records of what you've paid, including billing statements and canceled checks. Challenge any charge you think is inaccurate.

DO check contractors' references when it is time to have work done in your home. Get more than one estimate.

All the best with your home equity loan program.

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Disclaimer: All the articles in the site are provided for informational purposes only. The interest rates on home equity loans may vary from time to time and from what is written here. Please check with your equity loan provider. If you have any questions, please send all your emails to info@free-credit-reports-mortgages-calculator-debt-home-equity-loans.com!