The home improvement loan
A contractor knocks on your door and offers to put on a new roof
or resurface the driveway. The contractor offers to arrange financing.
You agree and the contractor starts work. Later, the contractor
gives you papers and tells you the job will be halted unless you
sign them. Unbeknownst to you, you have agreed to a home equity
loan with high points, fees and interest. To make it worse, you're
not happy with the work being done and the contractor, now that
he has your signature, is not showing up for work every day.
Signing over your deed
You are having trouble paying your mortgage and the lender has threatened
to foreclose. A "lender" contacts you with an offer to
help you find new financing. In the meantime, the lender wants you
to deed your property to him, calling it a temporary measure to
stave off foreclosure.
Once the lender has the deed to your property, he
treats it as his own, borrowing against the equity or selling the
house. You've become the tenant, with the lender demanding "rent."
If the rent is late, the lender can evict you.
||Do's and don'ts
to a home equity loan if you can't afford the monthly payments.
an explanation of any cost, term or condition you don't understand.
under pressure to sign documents.
Shop around if you want credit insurance. Buying it from a lender
may not be a good deal.
sign documents you haven't read or that have blank spaces to
be filled in after you have signed.
Keep meticulous records of what you have
paid. File all the billing statements.
to a loan that has extra products you don't want to buy, such
as credit insurance, or that includes terms that weren't there
when you applied.
charges that you think are inaccurate.
Don't allow the promise of extra cash or lower monthly payments
to cloud your judgment about whether the cost is worth it.
Check contractors' references before
having work done on your home, and get more than one estimate.
Don't deed your property to anyone. Instead, talk with an
attorney or someone else you trust.
a copy of everything you sign.
Be sure you are dealing with a reputable lender. You may
want to check with your Better Business Bureau, state licensing
authority, chamber of commerce or a consumer protection agency.
Ask trusted friends and relatives for referrals to lenders.