Homeowners, particularly minorities and the elderly or anyone with poor credit should be very careful in borrowing money based on their home equity. This is because there are exploitative and abusive lenders that target and take advantage of these type of borrowers. This may put their homes at risk.



There are certain things you need to understand in taking care of your credit, and hopefully protect you from exploitations.

Never agree to a home equity loan if you know that you don't have enough income to make the payments. You must think of this in advance so that you are sure you'll be able to meet your bills and the payments for the equity line.

Check all documents that have been handed to you and make sure that you don't sign anything you haven't read or understood. Some lenders and borrowers use this style in order to take advantage of clients, especially those who are not very familiar with written contracts and agreement terms. Make sure that you have understood all the terms and conditions. Don't sign anything until you do.

If your lender or anyone pressures you to sign, that is usually a clue that something strange is going on. Another thing you should avoid in these types of loans is one that comes with products that you will not need.

You should ask particularly if the credit insurance is requisite to a condition of the loan. If you find out that it isn't, and the charge is included in your loan but you want to remove it, you can ask the charge to be detached from your loan documents so that it will not add to your bills. If you think you need additional security, go and look around for the best rates.

You must keep the records carefully, including everything you've paid, all the billing statements and cancelled checks. If you notice that some of the charges are inaccurate, speak up and have it changed.

You also need to check the contractor's references to find out the time the work should have been completed. You should get more than an estimate just to make sure everything falls in place.

Again, you should read all the items very carefully and if you need an explanation of the terms and conditions that are not clear to you, stop and ask. You can talk to someone that you can trust and see if he or she can make sense of it for you. Another good resource is an attorney or a knowledgeable member of the family.