| Your home is a valuable asset. You can tell the home | | | | beware," says the Federal Trade commission. This |
| equity folks know this by the numerous ads | | | | type of loan is only for homeowners with more than |
| aggressively promoting home equity loans and home | | | | enough steady income to cover the extra monthly |
| equity lines of credit. They suggest you put your home | | | | payments. And they're certainly not for anyone who |
| asset to work. But is it a good idea for you? And, if so, | | | | might need to move and sell their home before the |
| which should you choose? | | | | second mortgage becomes due. |
| The advertisements are seductive, but remember "all | | | | But that's not how they're being advertised, especially |
| that glitters is not gold." Both loan options use your | | | | on the internet. Unscrupulous lenders promote these |
| home as collateral for a loan. There's nothing basically | | | | packages to the elderly on fixed incomes and to those |
| wrong with this idea other than the fact that you may | | | | with low incomes and poor credit ratings. They pretty |
| be greatly risking your most valuable asset. | | | | much offer you any deal you want - whether it's to |
| A home equity loan is a lump sum advance in the form | | | | your advantage or not - just to get your business. |
| of a second mortgage on your home. You borrow a | | | | These scammers gamble on people being unable to |
| specific amount for a certain period of time and pay | | | | make payments or to sell their home soon enough. |
| back the balance with interest in installments. | | | | Then the sharks move in for the kill, foreclose on the |
| A home equity line of credit, on the other hand, is a lot | | | | home and take all the equity that's been built into it. |
| like a having another credit card. The lender agrees to | | | | Foreclosures in California have doubled in the past |
| lend a specific amount of money over an agreed | | | | year. And this happens everyday - all over the country. |
| period of time and the borrower can draw against this | | | | So protect yourself. Only deal with an established local |
| line of credit whenever they want. | | | | lender you know you can trust. Don't let the promise of |
| Both programs use the equity in your home as | | | | quick cash, easy loan approval or lower monthly |
| collateral. Therefore, since the loan is secured, you | | | | payments cloud your judgment. And never let |
| usually get a lower interest rate than with a credit card. | | | | someone pressure you into making a decision and |
| This is the main reason home equity loans are being | | | | signing a contract. |
| touted as a great way to consolidate debt. Another | | | | Always think it through carefully, get a second opinion |
| benefit is that interest paid on these loans could be | | | | and be absolutely clear exactly what you're getting |
| deductible on federal and state tax returns. | | | | into. After all, you want to make sure you keep a roof |
| Sounds good doesn't it? But, in many ways, the | | | | over your head! |
| disadvantages can outweigh the advantages. | | | | Follow this advice and there's a good chance you can |
| To begin with, taking a chance on losing your home, by | | | | keep your home. |
| using it as collateral, is risky business. "Borrowers | | | | |