Guidelines for Avoiding Predators
By: Source: AARP Bulletin Today Date Posted: 2003-06-24 16:03:37
• Think twice before borrowing money against your home.
• Get independent advice from a nonprofit housing counselor or a lawyer you trust before seeking a loan or signing any documents.
• Obtain your credit score (see Understanding Your Credit Score) to help you negotiate.
• Shop around. Get at least three written quotes for upfront costs, interest rates, terms of the loan and monthly payments.
• Avoid loan pitches received by phone or mail or seen on TV.
• Avoid lenders recommended by home improvement contractors. Find a separate lender to pay for repairs or improvements.
• Don't borrow more than you can afford to repay each month. Don't let a lender make you give false information about your income or expenses on a loan application.
• Ask a lot of questions. If the answers are not clear, ask a counselor or lawyer for help.
• Beware of balloon loans, prepayment penalties and loan flipping.
• Remember that single premium life credit insurance is voluntary—it should not be made a condition of your loan. You can probably buy cheaper insurance elsewhere, without paying interest on it.
• Don't rush into a decision. Beware of lenders who offer "next day approval" or try to make you sign documents quickly.
• Remember you can back out of a loan any time before signing the contract and, by law, up to three days after signing.
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