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Home Equity and Mortgage Loan: Lender Styles You Should Avoid
from:Here's the scenario: You own a home -- the single greatest asset you have, but you need cash to finance an immediate need. Then, you think of applying for home equity loan. Yes, a home equity loan is the best, fastest, and easiest way to get big sums of money.
Here's another scenario: You're eyeing a particular house. The one you can truly call yours. You want to buy it, but don’t have enough cash to buy it. You think of a mortgage loan.
Since your focus is to get instant cash or own your own home, you can commit a mistake that will put your home at risk.
So, in order for you to know what that you've made the right decision, here's what you should avoid while in the process of applying for a home equity or mortgage loan:
* Signing an Unclear and Blank Documents
It's pretty basic that in any legal document, you must never, in any circumstances, sign papers that are either blank or unclear to you. But it's not enough to do this because there's still home owners (in spite knowing this rule) who seem to get persuaded by lenders to sign a deal. How? By force or pressure.
Believe it or not, many home equity and mortgage lenders use this as a tactic to corner you and let you sign papers you don't even understand. Here’s an example: Some contractor offered to repair your living room at a price very reasonable to you. However, you don’t have enough cash.
But your contractor has offered you a lender he knows who will finance the whole repair. He'll also arrange the necessary papers. You agree. The repair begins. At some point, your contractor presents you lots of papers to sign. These papers are either blank or unclear and are forcefully offered to you to sign (because if you don’t, he threatens not to finish the repair). So you sign the papers. Later you discover that it's a home equity loan. Soon, you're given unreasonable interest rate and substandard work.
If you let this happen, you're on the verge of losing your home. The trick is, if you're in this situation, say no right from the very start. But, if the construction has started, never sign any paper, even if it's under pressure.
* Agreeing to a loan you cannot afford to pay
This is one of the major causes of foreclosure. Once you apply for a home equity loan or mortgage loan, make sure you have enough income to pay the principal and interest for day 1 up to the end. Many lenders desire to get your house and wouldn't care if you couldn't afford the monthly payment. If the lender advises you to pad your income to get a loan, then you're in trouble. In the end your house will end up in the lender’s hand simply because you allow them to get it. If you badly need money now, always look at the effects of your loan in the future.
* Accepting promises of low monthly payments and extra cash
Always put everything on paper. If your lender promises you he'll give you low monthly terms or low interest rates, make sure there's a paper that supports it. This is your only evidence the agreement exits. If there's no paper signed by two parties to support your claim, then you can't receive the promise your lender gave you.
These 3 rules should always be on your mind when applying for a home equity mortgage. If you know these, then you can be assured you can pay the monthly rate at the same time save your house from foreclosure.
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