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Home Equity Loan Rules

What is home equity?

Home equity is defined as the market value of a homeowner’s unencumbered interest in his/her real property. This means the difference between the fair market value price and the outstanding balance of all leans or loans against the property. The home equity will increase as the homeowner makes his/her payments towards the loan or mortgage on the property. A person gains home equity in two ways, purchasing home equity with their down payment and the principle portion of any payments the person makes against his/her mortgage. Home equity may also serve as collateral in home equity loans or a home equity line of credit.

If a person gets a home equity loan and owed a certain amount of money and finds out that they still owe the amount even though they had been making payments, should they stop making payments of the loan is way more than what the property is valued at?

If the person looks at the original note then they can count the amortization to see what the interest rate was. The person should not stop paying the loan payments, they should simply see if the loan is being properly amortized and that of all payments have been applied properly.

Can a person sue the bank for criminal extortion if they have a home equity loan that the bank wants to raise the interest rate on making it impossible for the person to make payments?

This would not be considered criminal extortion due to the fact that the person still has legal options to paying off the home equity loan. The person can try to obtain a full payoff loan, or refinance through the bank or another bank. The person would need to contact the bank and tell them that they are looking to refinance through a 30 year fixed loan. The person may also consider shopping around for the best lender to handle his/her financial needs.

If a person opens a home equity loan and then cancels it with a 0 balance through all proper channels and then accidently access it, can the lender for the person to make payments or can the person sue the lender?

Since the person received the benefits of the funds they would owe the money, but the person can file counter claims to any claim the lender has for damages that the person has sustained due to their negligence which would offset any amount that the person owes. The amount the person would have to pay back, if any, would be a great deal lower due to the damages reward.

If a person needs a copy of the home equity loan documents, how could they gain copies of the lender won’t give them copies till the loan is paid off?

Normally the person would go to the lender and request copies of the paperwork. If the person has tried to get copies and was denied, then the person would need to send a certified letter to a person with authority at the lending company and make sure that it is sent with a signature card and return service.

When a person opens a line of home equity, the questions may arise of what is the person’s responsibility or what are the lenders responsibility, what can the person do if they feel the home equity is no correct? The person would need to seek the advice of an Expert to move forward with any home equity issues.
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