Research Home Equity Loan Companies Carefully Before Taking out a Loan
If you have bought a home in the United States (or pretty much anywhere for that matter) over the past few years, chances are that your home is worth quite a bit more than what you paid for it. Your first thought might have been to simply sell your home and bank the profits, and perhaps pick up a slightly smaller place in a slightly cheaper part of the country. But when you went to sell, you found that you couldn't get the price that you wanted for it. The subprime mortgage industry had basically collapsed, and lenders were suddenly much more picky when it came to screening potential mortgagees.
So what was the next logical step? Well if your home was worth a lot more than what you paid for it and you needed cash for whatever reason, then the next logical step would be to secure a home equity loan. The problem is that all home equity loan companies are not the same, and you really need to watch out for lenders who will have predatory terms.
Here are several things that you need to be on the lookout for when looking for a company to take a home equity loan from:
1. How long have they been in business? Sure, new companies can be great as well, but I always prefer to deal with businesses that have been around for years and have a solid reputation. Then I can check online for testimonials, any complaints, and perhaps even check out the Better Business Bureau.
2. What kind of fees are associated with obtaining the loan? Some companies will charge you an arm and a leg in "processing" fees to get your loan out the door once you are approved. A company should charge you minimal fees; after all, they will be making a great deal of money in the interest that you will be paying.
3. Dispersal of funds. What kind of turnaround time does the company have in terms of getting you your funds? Are we talking days, weeks or months?
4. Customer service. Does the company offer 24/7 customer service? Will you get your own loan representative that you can call at any time, or will you be forced to talk to someone new everytime? Ask these questions before you apply for the loan.
5. What kind of fees / penalties are there for making extra payments? Are there any penalties for paying off the loan early? What if you sell your home, what is the process then?
6. Does the company offer any type of sickness / injury insurance in case you get sick or injured and can't work? You don't want to have your home repossessed during this time.
7. Is your information secure? Does the company have a history of selling your information to other financial firms, who may try to upsell you on a credit card or perhaps life insurance? Check this one closely.
Just like buying a house, you need to research companies that you intend on doing business with. There are really strong companies out there, and really shady companies as well. Stick with the long-established and reputable firms and you should be fine.
Filed under: General Knowledge