One of the largest financial investments that you`ll make in your life is probably your home and as you pay down your loan, you are building equity in your home. Home equity is outlined as the excess of the value of the house over what you owe on your loan and can signify a considerable savings for you. Mortgagors will gladly agree to home equity as collateral for additional borrowings and you can raise money with your home equity any time you like. Unfortunately, the world is packed with conmen whose only objective is to rob you of your house and your home equity. Unfortunately their skill is unparalleled.
Take for example the home equity stripping scam that is widely known as “the bailout”. In these tough times, it is quite possible that you have fallen behind on your mortgage repayments and that you just anticipate having difficulty with your lender. You`re a key target for a bailout scam. Typically, the scam artist will approach you with a plan that sounds like a dream come true. He will offer to assist you with keeping your home and prevent foreclosure by providing to purchase your house very cheaply while you are putting your financial affairs in order. He would pay the mortgage on your behalf while permitting you to remain on in the home and pay him. He offers you the option of getting back the home along with interest after a fixed time period. If you can recover fast from your financial issues and the scammer is sincere, you would solve your problem, in theory.
What happens in actuality is as follows: let us assume that you possess a house valued at $250,000 on which you owe $100,000 on your mortgage. A sudden medical crisis has left you badly in need of cash. Enter the scammer who proposes to purchase your home for $150,000 which is enough to pay off your mortgage and provide you with some extra cash. He raises $150,000 on a loan and eliminates all of the liens on your house even while giving you a 2-year lease with a purchase option at the end of the period. If you fail to pay, as you`re prone to do, you might be turned out from the house and the scammer sells the home for $250,000, making a clean revenue of $100,000. Meanwhile, you`re out on the street with no house and you have lost your home equity in the bargain.
Here is the way to defend yourself from this kind of scam:
-Do not fall for false promises that will offer to shield you and your home from foreclosure.
-Don`t sign away the title to your house without acquiring expert legal advice that you could trust.
-By no means take on a contract for the sale of your house unless you are formally released from the obligations under your existing mortgage.
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