You must also try to watch out for the predatory lenders who will try to get you with the bait and switch method. This is when a lender will reel you in by promising you one set of terms and then change them on you following your agreement. The contract will state an interest rate which is variable. This implies that they can change it whenever they would like to. Try to be aware of this trick and look out for it.
Another common trick is referred to as loan packing. This is when your lender tried to get you in by insisting or even asking that you add on a bunch of other services to your loan such as insurance. This is not a forcible add-on and if they try to tell you that it is, they are lying. So you will have to try to take your business somewhere else.
Equity stripping is another trick which is used by lenders. How this functions is that they will try to convince you to add extra items or services and they will try to get you to borrow against the loan which will decrease your equity.
Loan flipping is yet another tactic lenders will make use of. They will attempt to get you to repeatedly refinance your home equity which in turn will strip your home’s equity. They can even charge you more fees for doing it, so be careful. Try to only take out loans that you really want and nothing more. Don’t let them attempt to change your mind.
The fresh start you might’ve gained in bankruptcy can be exactly what is needed in order to get your financial life back on track and establish strong credit. Try not to let unscrupulous lenders or over-eagerness push you to do something that you might not be comfortable with. Remember to always read the fine print in all the written documentation.
Click to the next page of your bankruptcy recovery guide: Home Equity Options 5