Not all loans or lenders are created equal. As part of this year's National Consumer Protection Week (February 5-10, 2001) campaign to help consumers avoid abusive lending practices, the Federal Trade Commission has issued a new Consumer Alert - "Shopping for a Home Equity Loan?"
The Alert encourages consumers to follow some basic steps to get the best loan deal. First, consumers should contact several lenders, not just the ones that send them mail, call them, or knock on their door. Consumers also are advised to ask questions about any loan terms and conditions they don't understand, and to pay close attention to fees. Knowing the amount of the monthly payment or the interest rate is not enough.
In addition, the Alert defines and explains the importance of a consumer's credit score - a number that could determine whether or not they get a loan, and how information in their credit report affects their credit score.
Consumers also are encouraged to negotiate with more than one lender, and to read the loan closing papers carefully before they sign. If the loan isn't what they expected or wanted, they shouldn't sign the loan. Consumer are urged either to negotiate changes or walk away.
The Alert contains a one-page "Home Equity Loan Shopping List" that can be used to compare loans based on factors like the Annual Percentage Rate, the interest rate, points and fees, the length of the loan, and penalties for late or missed payments.
To learn more about shopping for a home equity loan and to get a glossary of home loan terms, consumers may call the FTC's Consumer Response Center toll-free at 1-877-FTC-HELP (382-4357). Ask for a free copy of "Looking for the Best Mortgage: Shop, Compare, Negotiate;" "High-rate, High-fee Loans (Section 32 Mortgages);" and "Home Equity Loans: The Three-Day Cancellation Rule." Or visit us online at www.ftc.gov.
Copies of the documents mentioned in this release are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form. The FTC enters Internet, telemarketing and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies worldwide.
Office of Public Affairs
Peggy Twohig or Lucy E. Morris
FTC Bureau of Consumer Protection
202-326-3210 or 202-326-3295