Home Equity Warnings Issued for Second Mortgages
By Borris Boston

Commissioner John Allison warns consumers about home equity loans and second mortgages. Specifically he warns consumers to look at your home equity rate disclosures to find out if the rates are fixed rate or variable rate home equity lines of credit. Allison suggests that "adjustable rates and could be trouble for homeowners who are on a strict budget." Allison continued, "People get the equity out, say 'I'm going to pay my credit cards off and I'm gonna get out of debt.' Nine times out of 10, six, eight, ten months down the road the credit cards are maxed out again, and they still have the big mortgage payment."

Home Equity experts suggest that consumers are pretty loan savvy these days, with evidence indicated that many homeowners are avoiding adjustable rate second mortgages because now the fixed rates have been so low.

John Allison is the Commissioner with the State Department of Banking and Consumer Finance in Mississippi.

For more information: please go to www.dbcf.state.ms.us

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