Home Equity Theft Through Contractors Still a Problem

Tip! Preserve your home equity. Having home equity untapped in your house can provide a level of reassurance.

Using the equity in your home to upgrade or improve the home itself is one of the most popular reasons for taking out a home equity loan. With some improvements, the value of the property increases by almost as much as the cost of the remodeling itself. That, combined with the fact that the interest on a home equity loan is deductible from Federal income tax, makes using home equity for improvements a smart idea.

Unfortunately, some contractors see this idea as a great way for them to get a financial windfall at the expense of the homeowner. A classic scam involving home remodeling is still proving to be quite popular. Usually, when people want to remodel their home, they seek out a contractor and they seek out a lender to provide financing. In this financial scam, the contractors solicit customers and tell them that they can provide the financing themselves at competitive rates. The victims are usually taken in by the contractor's offer of being able to do it all. Unfortunately, a number of bad things often happen once the customer accepts the deal:

Expensive loan - The contractor does provide the financing, but the loan turns out to have terms that are not favorable. This may include sky-high interest rates, high fees and a long term of repayment.

Poorly done work - The contractor, having arranged the poor financing described above, then hires a subcontractor to do the work. This often results in shoddy work or no work at all. And all too often, the contractor seems to disappear.

Outright theft - In the worst-case scenario, the loan turns out not to be a loan at all. The owner signs the "loan documents" only to find out that they have actually signed the property over to the contractor.

The people who conduct such crimes often do so by taking advantage of minorities, working in communities where the residents are less educated or less likely to understand the terms of the documents. The victims are often too embarrassed to notify the authorities, so the criminals frequently get away.

Tip! Most debtors apply for a home equity loan especially if they are stuck in 17% to 21% of their credit card debt. Some homeowners tend to apply for a home equity loans to use the money to pay off debts that have high interest rates.

Anyone who is considering having some home remodeling done should seek out a qualified contractor themselves, rather than accepting an offer from someone who knocks on the door. In addition, the homeowner should seek references in order to verify that the contractor delivers as promised. A little caution can go a long way, especially if the alternative is losing your home.

ŠCopyright 2006 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.HomeEquityHelp.net, a site devoted to information regarding mortgages and home equity loans.

Home Equity News:

Bing: home equity site:msnbc.msn.com
Search results

Home equity loans drying up for some - Business - Personal finance ...
Like many homeowners during the housing boom, Lynnette Madden and her husband decided to open a home equity line of credit about a year and a half ago as ...
Americans' home equity near a record low - Business - Real estate ...
WASHINGTON ? Falling U.S. home prices have shrunk equity so much that the proportion of their homes that Americans actually own is near its lowest point ...
Home equity lines have dried up across U.S. - Business - Personal ...
Home equity lines have dried up across U.S. As home prices collapse, banks cut off credit, further souring the economy Below:
Late payments for home equity loans rise - Business - Real estate ...
WASHINGTON ? Late payments on home equity loans climbed to a 1˝-year high in the opening quarter of this year, while delinquencies on credit card bills ...
Retirees no longer count on home equity - Business - Personal ...
Many Americans have recently found themselves changing retirement plans after losing a substantial amount of home equity as the housing market and the ...
Equity in Americans? homes falls to historic low - Business ...
NEW YORK ? The equity Americans have in their most important asset ? their homes ? has dropped to its lowest level since the end of World War II ...
Students get creative to pay off loans - Business - Personal ...
Lines of credit typically work like a credit card, with a limit and a revolving balance: the average home-equity line of credit currently has an interest rate ...
Use of home equity hits a four-year low - Business - Real estate ...
Use of home equity hits a four-year low Freddie Mac report cites falling residence values, stricter lending standards Below:
Ford, Toyota are pinning their hopes on China - Business - Autos ...
NEW YORK ? Ford Motor Co. plans to build a new assembly plant in China ... $30K home equity loan FICO: 5.75%
Cities sue, invest to stop foreclosures - Business - Real estate ...
These stem from lost tax revenue and jobs as well as slower consumer spending that come with home equity declines, and don?t even include the financial toll ...

Newsfeed display by CaRP