[Published: Thursday, January 22, 2009 3:23 PM ET - Canadian Press NewsItem / NewsComponent / NewsLines / ByLine]
Homebuyers are being urged to read the fine print and to recognize the potential consequences of tying their mortgage to a grossly inflated secure line of credit - an increasingly common practice that's only now raising eyebrows as people review their finances in tough economic times.
Homebuyers are being urged to read the fine print and to recognize the potential consequences of tying their mortgage to a grossly inflated secure line of credit - an increasingly common practice that's only now raising eyebrows as people review their finances in tough economic times.
Recently divorced and just two days away from closing on her new home, Sherryl Nickel was shocked when she arrived at her credit union to sign the paperwork and realized the institution had registered a home equity line of credit worth $750,000 when she'd requested and been approved for $200,000.
"They just said, 'It's complete. It's done. We're doing this as a service to you' when I questioned it," said the Vancouver retiree, noting the home was worth only $535,000.
"You don't have time to say, 'Whoa, whoa, whoa, send this back to your head office and get the paperwork redone.' You just don't have that opportunity."
Her lawyer later told her the practice is common and is billed as a boon for consumers who won't have to go through the process of hiring a lawyer again should they need additional credit down the road.
But the practice is also raising questions about the impact it might have on one's creditworthiness and ability to shop around with other lending institutions.
Read Entire Article Here: http://www.cbc.ca/cp/Money/090122/J012204AU.html
No comments:
Post a Comment