Home Equity Scams – Loan Flipping
You may already have a mortgage and have no difficulty making the payments but the lure of some extra cash makes the thought of refinancing an appealing one. A lender tells you how you can get the equity in your home working for you through refinancing and borrow a little extra for your immediate needs or desires.
After you have made a few payments, the lender offers you a bigger loan for some other expenditure, such as home improvement or a vacation. If you agree, your loan is again refinanced into a new loan and the lender loans you more money. This is called loan-flipping. Every time the lender refinances the loan, the lender charges points and fees and your interest rate may increase.
Your debt increases and is stretched out over a longer period of time. The extra cash you receive could be more than offset by the fees you are charged for refinancing. You will also be paying interest on those extra fees. In the end you could end up owing more than you can afford and lose your home.
it is sickening how these people can prey on those desperate for money, especially if they may have legit finance troubles like paying for cancer treatments.
By janus on August 29th, 2006 at 2:05 pm
Home equity loans can be an effective way to use the equity you have built up in your home to obtain necessary funds, provided the lender is honest, the rates are good and you can afford to make the payments. It is when people overextend and an unscrupulous lender allows or encourages them to overextend that there can be dire consequences.
By Andrea on August 29th, 2006 at 4:26 pm