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Many of the equity loan offers you receive are probably from lenders and brokers you’ve never heard of. They could even be located out of state. It’s very hard to tell what quality of service they offer. It’s wise to be cautious when considering a lender or broker you are not familiar with. An equity loan is a major financial commitment. Make sure you are working with someone who will be a good long-term partner.
The Federal Deposit Insurance Corporation (FDIC) urges caution when dealing with lenders you don’t know. “Be very careful about dealing with a lender who just appears at your door, calls you or sends you mail,” they say on their website. “Ask friends and family for recommendations of lenders.”
Beware Predatory Lenders
Predatory lending is a growing problem in the United States. Predatory lending practices are designed to take as much money from your pocket as possible. In worst-case scenarios, homeowners have even lost their homes to predatory lenders.
Homeowners are often approached by contractors who offer to provide financing for home improvements. Be very cautious of this kind of tactic – it is one that is often used by predatory lenders.
Watch out for loans that allow you to take out more than the value of your home; that commit you to payments that are too high for your budget; hidden fees and penalties. For an in depth look at predatory home equity loan practices, visit our website.
About Brokers
Many of the home equity loan ads you see on TV, in the mail and online come from brokers – not actual lenders. Brokers can be useful, but keep in mind that they will not be the company you actually get the loan from. Our feeling is that it’s better to work directly with the organization that will be providing your loan.
Loan or Line?
There are two major types of loans based on your home’s equity. The most common is a home equity loan in which you receive the amount of the loan at the beginning of the loan and then pay it off in monthly installments over a number of years. A home equity line of credit (also known as a HELOC) starts with a zero balance. Generally, you access your credit line by writing checks on the account. Once you have begun accessing your credit line, you make monthly payments on the amount.
Need More Advice?
Getting a home equity loan is a very big decision. It can often be a confusing process that might leave you with a lot of unanswered questions.
If you’re in that position, why not give us a call? Our loan officers are experts at helping members understand the details of equity loans and would be happy to help you decide what’s best for you.
Great Loans at Abbey Credit Union
If you have decided to get a home equity loan, give Abbey Credit Union a call. We have great loan packages at very competitive rates. We’ll be happy to help you get the loan you need.
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Spring, 2007, Abbey Newsletter 
