The two most common kinds of home equity fraud are home equity „flipping“ and home equity „stripping“.

 

It basically means taking finances out of your home/taking your home away. Imagine that you have a hard time paying your monthly mortgage loan payments. Never apply for additional credit in such a situation. Be careful. Many lenders might try to persuade you to fake some info to qualify for a loan you would never get otherwise. The best decision is not to listen to such lender and start looking for a new one. In case you cannot afford a mortgage loan, do not obtain one – remember that lying does not solve the situation, it might just complicate everything for you. If you will not be able to pay your monthly mortgage payments, your lender might well take away your house and “strip” you of what you have built (thus the name equity stripping). 

 

One of the most common forms of home equity stripping is ‘home equity lines of credit’. In this form of revolving credit, your home functions as some kind of a guarantee. In such cases, it is extremely important to know and truly realize how big loan you can afford and at what rate. Be honest to yourself, otherwise you may end up losing your home. 

 

Home equity flipping occurs when a lender is trying to convince you flip your current loan, whether you currently have more convenient conditions or not, just for their own benefit (keep in mind that the lenders earn on all your transactions).  Do not ever let them persuade you that you are getting a better deal by refinancing over and over again. It is always better when you are actually informed about your current situation. Read all the papers you get and use your own knowledge and instinct. If you have doubts, consult it with someone else and don’t be shy to ask for an advice.