Do you own your home? If so, it's likely to be your greatest single asset. Unfortunately, if you agree to a loan that's based on the equity you have in your home, you may be putting your most valuable asset at risk.

Sometimes, refinancing your mortgage can really save you money. You may be able to pay less interest, lower your monthly payment, or convert from a 30-year loan to a 15-year loan (and build your equity faster!). But be sure that refinancing is right for you.

There is nothing wrong with refinancing your home or getting a home equity loan, you just need to be aware of the different deceptive practices out there so you can protect yourself.

It is wise to think really hard about putting your home at risk. While it is tempting to get the money to get out of debt, that debt will eventually go away. If you put your home on the block, then you might end up losing your home.

Homeowners - particularly elderly, minority and those with low incomes or poor credit-should be careful when borrowing money based on their home equity. Why? Certain abusive or exploitative lenders target these borrowers, who unwittingly may be putting their home on the line.

There are many, many good companies out there who can work with you and will explain what you are getting into and what the risks might be.

Unfortunately there are those, who would like nothing more than to get into your pocketbook AND your house.

Here are some things you can look for to avoid losing your home. These things include equity stripping and loan flipping to out right lying by hiding loan terms and extra charges.

Equity Stripping

You need money. You don't have much income coming in each month. You have built up equity in your home. A lender tells you that you could get a loan, even though you know your income is just not enough to keep up with the monthly payments. The lender encourages you to "pad" your income on your application form to help get the loan approved.

While it may seem a little paranoid, your house is at stake. Just be aware that the lender may be out to steal the equity you have built up in your home. If that is the case, he doesn't really care if you can make the payments or not. He is ready to foreclose as soon as you default and there goes your house and all your equity.

NOTE: An equity loan is an extra loan based upon the equity in your house. When you take out this type of loan this is added to what you already owe, therefore your monthly payment is larger and you have put your house at risk. Any time, someone suggests you do something that is not truthful, I would say Walk Away and Fast.

Hidden Loan Terms: The Balloon Payment

Here is the scenario: you've fallen behind in your mortgage payments and may face foreclosure. Another lender offers to save you by refinancing your mortgage and lowering your monthly payments. ALWAYS, ALWAYS look carefully at the loan terms. One of the Hidden Loan Terms might be what is called The Balloon Paymenty. This means that at the end of a certain amount of time, 3 - 5 years, the full amount is due. If you can't get financing for the full amount due then you will lose everything and the lender can take your house away from you.

While the lower terms might appear attractive, just remember that in 3 - 5 years, while you might be financially where you want to be, you could very well have hit on hard times and your credit score be so bad that you couldn't get a loan if your life depended upon it. You might be unemployed. If that is the case then you will lose everything you had in your home.

I am extremely aware of how life can change and there is no reason, in my view, to put yourself and your family in a bad position isn't worh the risk. That is the reason I have always stayed away from ARMs (Adjustable Rate Mortgages). My philosophy is: "If I can't afford it now, I will wait until I can afford it."

Protecting Yourself

You can protect yourself against losing your home to inappropriate lending practices. Here's how:

DON'T:

Agree to a home equity loan if you don't have enough income to make the monthly payments.

Sign any document you haven't read or any document that has blank spaces to be filled in after you sign.

Let anyone pressure you into signing any document.

Agree to a loan that includes credit insurance or extra products you don't want.

Let the promise of extra cash or lower monthly payments get in the way of your good judgment about whether the cost you will pay for the loan is really worth it

Deed your property to anyone. First consult an attorney, a knowledgeable family member, or someone else you trust.

DO:

Ask specifically if credit insurance is required as a condition of the loan. If it isn't, and a charge is included in your loan and you don't want the insurance, ask that the charge be removed from the loan documents. If you want the added security of credit insurance, shop around for the best rates.

Keep careful records of what you've paid, including billing statements and canceled checks. Challenge any charge you think is inaccurate.

Check contractors' references when it is time to have work done in your home. Get more than one estimate.

Read all items carefully. If you need an explanation of any terms or conditions, talk to someone you can trust, such as a knowledgeable family member or an attorney. Consider all the costs of financing before you agree to a loan.

As I said at the beginning of this article, home refinancing might be for you and there is nothing wrong with epxloring all your options, just be awary and wary of deals that are to good to be true

For more information on types of deceptive practices some lenders us, go to

http://www.thebottlehut.com/Articles/Money/RefinancingYourHome.html