Home Equity
In recent years, many people have responded to advertisements for home equity loans and refinancing, not fully understanding the risks associated with taking out these loans. Home equity is the difference between the amount of money you still owe on your mortgage and the amount your home is worth on the current market. Therefore, if your home is worth $175,000 and you have a mortgage of $100,000, you have home equity valued at $75,000. Your amount of home equity will vary depending on whether or not you have second mortgages or liens on your home.
Threats of Foreclosure
A home equity loan allows a person to borrow back the money they have already paid into their home equity. However, these loans are risky because they hold a person's house as collateral, meaning that if the person defaults on his or her monthly loan payments, the lender can foreclose on the home.
Many people chose to take out home equity loans during the housing crisis to make payments on other bills or loans, often without fully understanding the terms of their contracts. Some home equity loan providers are now under investigation by the Federal Trade Commission for allegedly intentionally misleading homeowners with:
- Hidden loan terms
- Extra fees or last-minute additional charges
- Inaccurate monthly statements
- Loan flipping
- Encouraging unaffordable loans with intent to foreclose
- Other scams
After falling victim to one of these actions, many individuals were faced with the threat of losing their home.
Contact Us
If you or someone you know is facing financial issues and is considering taking out a home equity loan, a knowledgeable Arizona bankruptcy lawyer can help you review your options and determine steps you can take to get your finances back on track. Contact the legal professionals of the Harmon Law Office, LLC, at 480-829-0494 to learn how we can help.