In other words, the benefit of the loan must outlast the loan period. Taking a loan for financing that elusive vacation is a strict no-no. Moreover, home equity loans must also never be taken for day-to-day expenditures. This option should be saved for emergency needs only.
When applying for a home loan, all credentials of the lender must be keenly checked. The local consumer protection agency could be contacted for providing a list of lenders with an honest repute. All fine print must be carefully scrutinized, and one must avoid signing documents without having read them or which have blank spaces in them. Moreover, it is also advisable to keep a copy of all documents for future references.
Avoid the temptation of applying for a home equity loan wherein your monthly income is inadequate to finance your debt obligations. In such an eventuality, the lender can foreclose on your home because of a default. Hence never let your greed overtake sound common sense when applying for that home equity loan.
A home equity loan is normally a second mortgage. Hence one must carefully take stock of one's financial conditions and analyze whether one can afford extra debt. This is because once a home equity loan is undertaken, loan repayments must be made a top priority, as it is your home that could be taken away from you in the event of a default.
Moreover, one needs to maintain a good credit record, as banks that have advanced you credit can freeze your credit limits in case your credit record takes a turn for the worse.
Having said this, it does not in any case deny the fact that home equity loan products are indeed very attractive.
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