Another dangerous home equity loan scam can surface if you have trouble paying your mortgage and are at risk of foreclosure. Another “lender” may ask you to deed the property to him as a temporary measure to avoid foreclosure, and he will refinance the loan. You are desperate and agree.

The property now belongs to the lender and he can treat it as his own, borrowing against it or even selling it. Because you do not own the home any more, your mortgage payments will be treated as rent and if you fail to make payments, you could be evicted from your home.

Never deed your property to anyone else. If you are having trouble meeting your mortgage payments, seek financial counseling from an accredited source.

One way the lender can add extra costs to your loan is by adding “credit insurance”. Often these are charges for benefits and insurance you didn’t ask for. The lender may insist that these come with the loan or that the loan would have to be re-written if you refuse them and may not be approved. Usually, the lender hopes you do not notice these extra charges. If you agree to pay for the insurance, you may be paying a lot more for your loan than you bargained for.

Don’t agree to a loan that includes credit insurance or extra products you don’t want. If credit insurance is a condition of the loan, shop around for the best rates.

A lender has offered you a refinancing loan that will significantly reduce your monthly mortgage payments. Read the loan terms carefully.

Your payments may be lower because it is a loan on which you repay only the interest each month. At the end of the loan term, the principal is due in one lump sum, called a balloon payment. You must then pay the entire sum or refinance; if you cannot, you may lose your home.

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.