What is equity grabbing?Answer:
Plain definition of equity grabbing is having a lender intentionally push the borrower into a home loan so that they can default and the lender could "grab the equity".
Equity is the value of your home free of mortgage. For example, if you own a $300,000 house and you have a remaining $200,000 to pay your equity is $100,000. The last thing you want is to lose your equity following predatory lender advice.
For example, your lender may ask if you would like to grab some cash. In the above example, to get a check of $100,000 is so tempting. Do you want to do it? Yes, if you need money for a reason - health care bill, or financing college are good reasons to cash equity. However, how about cashing your equity for no reason? Don't do it! If you do that, you are very likely to spend the dazzling cash and to not be able to afford the monthly payments.
Sometimes you can get into equity grabbing scam by hiring a contractor who has a working partnership with a nice lender, capable of furnishing you with a nice home rehab loan. Before you accept the offer, be careful as this may be a perfect example of equity grabbing. Make sure you read all the terms carefully and inspect loan rates closely. Loan rates may not at all be so nice in three months time, when teaser rates expire. Use your right to cancel the transaction if you feel suspicious about the loan.
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