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The best way to find out about home equity loans is to shop around. If you speak with several providers, including both small and large organizations, you will have a much better idea about how the industry works and be in a better position to choose a lender.
The home equity market is extremely competitive. The obvious is to compare interest rates. Also find out whether a lender will waive the cost of the appraisal and other charges for such things as credit and title reports. Check to see if you'll get hit with a yearly fee for your loan—many lenders charge $25 to $50. In addition, be sure to inquire whether the lender will charge you if you decide to terminate the loan (pay it off) after a year or so. Sometimes there is a stiff penalty of several hundred dollars.
You may be surprised where you can find lenders for home equity loans. Besides the normal lending institution you should check out your insurance company or credit union. You’ll also find many choices on the Internet.
After you have determined that the loan terms are competitive, check with the agency in your state that licenses mortgage lenders to make sure the company is legally able to do business in your state. The Federal Trade Commission (FTC) regulates non-bank lenders and enforces several credit laws that protect consumers, including the Truth in Lending Act, Equal Credit Opportunity Act and the Fair Debt Collection Practices Act.
Finding the best home equity loan can save you thousands of dollars so the following are good recommendations:
- Shop around. Try a variety of sources (banks, savings and loans, brokers, insurance companies and credit unions).
- Manage your credit score and make sure your credit reports are accurate.
- Ask your network of friends and family who they recommend.
- Compare your offers to those found on websites and advertisements.
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