Understand risky loans before you agree to one. And watch out for these common loan scams.
This chapter deals with common but risky types of loans, such as balloon loans and high loan-to-value loans. They're perfectly legal, but dangerous if you don't know the consequences. The rest of the chapter covers loan scams and what you can do about them. Did you know the Truth in Lending Act provides a right to cancel certain real estate loans? Read about it here.
What you can expect to learn from this chapter:
- Balloon loan pitfalls
Beginning with an explanation of amortization, the concept of a balloon loan is delineated.
- Risks of high LTV loans
High loan-to-value loans could lead you to owe more money than your house is worth.
- Scam artists
Equity stripping, loan flipping and a dozen other schemes you need to be wary of. Plus, a list of things you must always do when taking out a loan.
- Rights of rescission
The Truth in Lending Act gives you the right to cancel certain real estate loans within three business days. That's the right of rescission.
- Dealing with fraud
If you've been a victim of fraud, you'll find all the phone numbers and Web sites here to help you with the problem.