Question:

What is home loan flipping?

Answer:

Home loan flipping is a trick used by the lenders to make you pay extra cash (points and closing costs) by forcing you into refinancing more often than you need. For example, everyone of us would like to get some extra cash, especially if we have had our mortgage for some years and we are convinced that our equity has to work for us. Our lender can easily talk us into loan refinancing telling us we should tap the equity we have built over the years and make a cash-out refinance. The repetitive unnecessary loan refinancing is in fact the so-called home loan flipping.

Nice, we sign the papers, take the money and go, having paid prepayment penalty and some settlement costs, and entered more long-term debt. Yes, you have gained some cash, but every time you go through this cycle of home loan refinancing the more debt you accrue and the larger the monthly payment becomes.

This is how through home loan flipping you may end up with foreclosure since every time you have enjoyed some extra cash fees and overall increasing debt have swelled your monthly payments considerably. So, say no to your lender if they call to offer you to cash your equity again and go for a vacation.

Recommended helpful present and future homeowners links:
Why: Refinance to a fixed rate loan while mortgage rates are still low.
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Why: Know and protect your credit report and score.
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Why: Find your next home and save money.
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Common misspellings: mortage and morgage