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You’ve heard of ‘The 7 Deadly Sins’, well here’s a
bit of a spin, but the consequences can be severe if
you don’t take these into consideration, or keep
your eyes open for lenders who could possibly be
doing this.
Now, there are other more varied approaches that
lenders can take, but I’d like to make you aware of
the 3 more common ones.
1. When NOT To Sign Over Your Deed
Ok, here’s the situation, you’re having trouble
paying your monthly payments with your current
lender. They’ve stepped up the game and have gone as
far as to threaten foreclosure on your home.
Worried, and not sure what to do, another lender
approaches you, and offers to help you out by
refinancing and helping you out in your
‘predicament’. But, because he can help you, he
say’s as part of the formality, he needs you to
assign your deed over to him, saying something like
it will mean that your current lender will not be
able to foreclose.
DO NOT DO THIS! Once the lender has your deed, the
financing will likely not come through, and you’ll
be left in a home you no longer own. The lender can
then almost do whatever he wants, and will treat you
as a tenant, not as an owner.
2. When NOT To Draw Down On Your Equity
You’re in need of some money… maybe you’ve hit some
medical bills that weren’t expected. You’ve
successfully built up a considerable amount of
equity in your home over the years, and think that
you’d like to use that.
A lender approaches you, and says they can do it,
but even though you won’t be able to afford the
higher monthly payments, they tell you to “just bump
up your income a little” to make it get through,
then worry about it after.
The problem with this is that you’ll likely lose
your home. I’m not kidding, lenders like this don’t
care if you can’t make the monthly payments, if you
default, then they’ll just take your home and sell
it and pocket the difference. Stay CLEAR of these
people.
3. The Hidden Balloon Payment Clause
If you’re pressed for payments, and want to
refinance, make sure you read the fine print of the
contract. A lender might come to you and say that
they can reduce your monthly payments and save you
from foreclosure. That might be well and good, but
in the fine print, you might find something that
says that the balance of the principal amount is due
at the END of the loan in one lump some payment.
If this is the case, be VERY careful, and don’t do
this, you’ll likely face foreclosure anyway at the
end of that loan.
I hope that this guide has been helpful for you, and
opened your eyes to some possibilities that are out
there.
About the author:
Thanks for taking the time to read this article. For
more quality articles by Ron Treveli on Home Equity
Loans be sure to visit
www.home-equity-loan-guides.comwhere i'm
constantly adding more content specifically on home
equity loans.
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