Protect Yourself From Home Equity Loan Scams

It's become almost instinctive these days for some people to rush to tap into the equity in their homes when they find themselves in need of cash. That's because of the growing awareness that home is where the money is. However, it pays to stay alert as you pursue funding, since your budget will be affected for years to come.

There are a wide variety of home equity loan scams out there. Whether you're planning to tap your equity through a home improvement loan, a home equity loan, or a home equity line of credit (HELOC), here are some tips to keep you out of trouble.

No rose-colored glasses: Don't be dazzled by dollar signs. Make sure that you've considered all the costs and conditions of any loan before signing on the dotted line. Since your intention is to solve a short-term problem with a long-term solution, consider whether the loan you choose makes sense over the long haul.

Don't succumb to pressure: Avoid being bullied into accepting home mortgage products that you don't want, such as credit insurance. Shop around for the extras that you do want before allowing them to be rolled into your loan. They may be cheaper somewhere else. If you can't reasonably handle the monthly payments or the loan costs, reject the offer. Follow your gut instinct-it's probably right!

Watch what you sign: Read everything carefully before you sign anything, and make sure that you understand it. Don't put your John Hancock on anything that has blank spaces that could be filled in later.

Don't deed your property: If you think that you should deed your property over to another party for any reason whatsoever, consult with an attorney first.

Even if you're desperate, act like you're not. Take your time, stay on your toes, and make a good decision. You'll need to live with it for a very long time. And you'd like to live with it inside your own home, not on the street because you inadvertently lost it.