Home
Articles
Don't Fall for These Home Equity Loan Scams

Don't Fall for These Home Equity Loan Scams

Author: CA Hagy on March 1, 2010

Home equity scams are abundant in the mortgage industry. Here are a few that you should watch out for.

It may be tempting to get a home equity loan to pay off some bills, do some remodeling or just to have some extra cash in your account. Many times, a home equity loan is the ideal way to fund these situations. However, you have to be careful because many people and companies are out to scam homeowners out of thousands of dollars. Here are some scams that have been going around for years that you should be aware of so you do not fall victim to them.

Balloon Payments
Balloon payments are not in themselves a scam, but the way a mortgage company charges you a balloon payment may be. There are several mortgage companies out there who claim they can "save you" from foreclosure. The way they do this is to refinance your home with lower payments each month that you can afford to pay. However, what they don't tell you (except in the very very fine print) is that you will be responsible for a balloon payment at the end of the loan term. This balloon payment will include all the money that you owe from paying the reduced payments over the years. If you cannot pay this payment, you will be facing foreclosure once again.

Stripping
Stripping is when a shady lender will tell you to "pad your income" when you are applying for a mortgage loan. These lenders are not concerned about you paying your mortgage. They couldn't care less about your ability to pay the monthly payments because they will just foreclose on your property. This goes for home equity loans, too. If you become a victim of this type of scam, your home equity can essentially be "stripped" and you will be left with nothing after years of trying to build it up.

Relinquishing the Deed to Your Home
If you are facing foreclosure and seeking help through mortgage lenders, some shady ones may tell you to simply sign the deed to your home over to them. This will be, according to them, just for a short period of time to help prevent having your home foreclosed upon. Unfortunately, once you sign the deed over, you may never get the home equity loan you were expecting from the company. What's even more is that the mortgage company may have borrowed against your home or sold it to somebody and you have no recourse because your name is no longer on the deed. You may be charged rent instead of mortgage payments and all of your equity is ruined. The company that now holds the deed may even have the legal right to kick you out of your own home.

In essence, keep these tips in mind to prevent yourself from falling prey to these scams: only agree to a loan if you have a stable income and you can afford the payments, read anything before signing your name to it and never cave to pressure from a company that wants your home's deed. Check with the Better Business Bureau and other resources before working with a home equity mortgage company to find out if they are reputable or if they have complaints filed against them.

Add your Comment

or use your BestCashCow account

Article Categories

New Savings and CD Rates

Featured - Home Equity Line Of Credit Rates 2024

Lender	APR (%)^?	Monthly Payment^?	Learn More
Third Federal Savings and Loan	Intro APR 7.240 % After Intro: 7.240 %	$0	Learn More More Info
Conditions… Variable APR of Prime minus 1.01% in all states. Min loan amount $10,000. Max loan amount $200,000. 30-year term. Annual fee waived for the first year. See conditions for guarantee at thirdfederal.com. Third Federal rate are typically 20% lower than other leaders Guaranteed Lowest Rate No closing costs, prepayment penalties, or minimum draw requirements 10 year draw period
Rate	Intro APR 8.250 % After Intro: 8.250 %	$25,000	Learn More More Info
A Guaranteed Rate HELOC is secured with your home as collateral, whereas personal loans and credit cards are not. To check the rates and terms you qualify for, we will conduct a soft credit pull that will not affect your credit score. However, if you continue and submit an application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit. Approval may be granted in five minutes but is ultimately subject to verification of income and employment, as well as verification that your property is in at least average condition with a property condition report. Five business day funding timeline assumes closing the loan with our remote online notary. Funding timelines may be longer for loans secured by properties located in counties that do not permit recording of e-signatures or that otherwise require an in-person closing. Guaranteed Rate Home Equity Line is an open-end product where the full loan amount (minus lender, broker, third party, and governement fees, as applicable) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw. Apply in 5 minutes, get your money in as fast as 5 days. Digital application experience. Funds directly to your bank account. No in-person appraisal needed.
Achieve Loans	Intro APR 10.625 % After Intro: 10.625 %	$0	Learn More More Info
All terms are estimates until underwriting is complete. Offer shown includes a .50% discount for automatic payment enrollment (autopay enrollment is not a condition of loan approval). 10, 15, 20, and 30-year terms available (20 and 30 year terms only available for cash out requests). All terms have a 5-year draw period with the remaining term being a no draw period. Payments are fully amortized during each period and determined on the outstanding principal balance each month. Closing fees range from $750 to $6,685, depending on line amount and state law requirements and typically include origination (2.5% of line amount) and underwriting ($725) fees if allowed by law. Property must be owner-occupied and combined loan-to-value ratio may not exceed 80%, including the new loan request. Property insurance is required and flood insurance may be required if the subject property is located in a flood zone. You must pledge your home as collateral. Offers are only valid in states where Achieve is licensed. Loans are not available to residents of all states and available loan terms and fees may vary by state where offered. Contact Achieve Loans for further details. Competitive rates, Pre-qualify in minutes Mortgage Advisors standing by to help find the best solution Flexible terms with fast funding Minimum credit score: 640
New American Funding, LLC	0.000 %	$0	Learn More More Info
Cash-Out and Home Equity Options Available. Home Improvement, Buy a Vacation Home 303k+ positive reviews, A rating from the BBB Pay off higher interest rate credit cards, Pay college tuition 100% online mortgage application available
Figure Home Equity Line	0.000 %	$0	Learn More More Info
The Figure Home Equity Line is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw. Fastest way to turn home equity into cash Flexible terms, redraw up to 100%, borrow $20k-$400k Approval in as little as 5 minutes. Funding in as few as 5 days. Use to consolidate debt or finance your next home project
AmeriSave Mortgage Corporation	0.000 %	$0	Learn More More Info
• Home Equity Loans & Refinance – Cash out • Customized rate quote with no impact to credit • Low Rates, Quick Approvals, Wide Range of Products • Over 100 Billion Funded. 22 Years in Business Home Equity Loans & Refinance – Cash out Customized rate quote with no impact to credit Low Rates, Quick Approvals, Wide Range of Products Over 100 Billion Funded. 22 Years in Business
CrossCountry Mortgage, LLC	0.000 %	$0	Learn More More Info
Please note that the interest rates offered are subject to change based on market conditions and borrower eligibility. The pricing and rate provided are accurate as of the specified date. It is important to be aware that the minimum loan amount for any loan program is $50,000. The specific amount and terms of the credit offer will be determined based on underwriting approval and guidelines, which include factors such as your credit history, your ability to make payments, and the available equity in your home. To qualify for this offer, you must meet the required criteria and demonstrate creditworthiness. Additionally, providing up to two years of income verification may be necessary. The severity of your credit may also impact the required down payment. It is crucial to understand that the lender reserves the right to cancel this offer if the provided information cannot be verified. Please note that all bankruptcies must be discharged in order to be eligible. This offer is nontransferable and is specifically available for single-family residences or owner-occupied condominiums. Please be aware that mobile homes and cooperatives are not included in this offer. It is important to note that the lender must hold a valid first lien position, and property hazard insurance is a requirement. These are some key details to consider when evaluating this offer. It is essential to thoroughly review the terms and conditions and seek clarification from the lender regarding any specific questions or concerns you may have before proceeding with the application process. Transform Your Home Equity Into Cash: Explore our Tech-Powered Solutions! Unlock Your Home's Value: Discover the Power of our Online HELOC! Maximize Your Equity: Get Cash-Out Using Our HELOC for Your Next Big Step Secure Your Future: Experience the Ease of our Fixed Home Equity Loans
Spring EQ	0.000 %	$0	Learn More More Info
About Spring EQ’s Rates and Terms Spring EQ LLC NMLS ID #1464945 (nmlsconsumeracces.org). No prepayment penalty. No need to refinance your first mortgage. Closed-end fixed rate loans and fixed and adjustable rate HELOC options are available. Spring EQ is an Equal Housing Lender. These results are for informational purposes only. This offer is an invitation to apply for an offer for credit or a loan and should not be construed as an indication of eligibility or a binding underwriting decision. Rates are subject to change based on market conditions and the entries of your specific application. All loans are subject to $995 origination fee and annual fee of $99 (except in certain states, where fees may be lower or not applicable), plus third-party fees. Monthly payment shown reflects monthly principal and interest amortized over the term of the loan based on the initial draw amount. Spring EQ applicants are required to provide a current and valid completed application, proof of income, mortgage statement, property hazard insurance, and a photo ID. Any pre-qualification or result is in no way a pre-approval, indication of eligibility, or binding underwriting decision. All borrowers are required to meet Spring EQ's current underwriting guidelines including verifications of applicant’s credit profile and property value, $25,000 initial draw requirement OR 75% of the line amount (whichever is greater), a FICO score of 640 or greater, and a debt-to-income ratio of less than 50%. Actual rate and APR for qualified borrowers will be determined by a combination of factors, including their creditworthiness as determined by a single credit bureau pull, loan amount requested, property value, and more. In addition to these, other factors specific to applicants' profile and Spring EQ's Underwriting Guidelines may impact rate and eligibility. Offers subject to origination fees based on loan type and property state. Access up to 90% of your home's equity, up to a maximum of $500,000. FIXLINE: The flexibility of a HELOC with the stability of a HELOAN. A fixed rate for life- no need to worry about fluctuating rates. We make it easy - and fast - to access your cash (as little as 11 days).
Upstart	0.000 %	$0	Learn More More Info
1. APRs for initial advances range from 8.25% to 18.00% based on funded HELOCs as of September 2024. Your actual rate will depend on many factors such as your credit history, loan-to-value ratio, line amount, loan term, lien position, and property state. The lowest rates are only available to the most qualified applicants. The APR is variable, but the APR that will apply to each draw will be fixed on the date the draw is made. 2. As of October 2024, 10% of funded HELOCs achieved a closing timeline of 6 days or less and a funding timeline of 10 days or less. This timeline assumes consumers close with our remote online notary, provide supporting documentation promptly, and ensure the information provided is accurate and consistent with our verification process. Delays, discrepancies, and other unforeseen factors may impact the closing timeline. MBA’s 2024 Home Lending Study reports an average industry closing time of 31 days. 3. A Home Equity Line of Credit has a variable rate. The APR may change, but the APR that will apply to each draw will be fixed on the date the draw is made. Your APR will be the Prime Rate at the time of draw plus a margin fixed for the life of the HELOC. As low as 8.25% APR on your initial draw* Get your money up to 5x faster than the industry standard* Fixed rate on each draw* No paperwork needed to apply
District Lending	0.000 %	$0	Learn More More Info
HELOC, HELOAN or CASHOUT REFI all available. No Lender Fees Fast Easy Over 20 Years Experience
PenFed Credit Union	0.000 %	$0	Learn More More Info
Interest-only payments during the 10-year draw period Home Equity Line of Credit - Equal Housing Lender Loans Amounts from $25,000 - $500,000 Get a HELOC from PenFed to Put Your Home Equity to Work HELOCs Can Offer Lower Rates Than Credit Cards or Personal Loans

See More Home Equity Rates →

Don't Fall for These Home Equity Loan Scams

Add your Comment

Related Articles

Article Categories

Featured - Home Equity Line Of Credit Rates 2024