Using the equity in your home to upgrade or improve the home itself is one of the most popular reasons for taking out a home equity loan. With some improvements, the value of the property increases by almost as much as the cost of the remodeling itself. That, combined with the fact that the interest on a home equity loan is deductible from Federal income tax, makes using home equity for improvements a smart idea.
Unfortunately, some contractors see this idea as a great way for them to get a financial windfall at the expense of the homeowner. A classic scam involving home remodeling is still proving to be quite popular. Usually, when people want to remodel their home, they seek out a contractor and they seek out a lender to provide financing. In this financial scam, the contractors solicit customers and tell them that they can provide the financing themselves at competitive rates. The victims are usually taken in by the contractor’s offer of being able to do it all. Unfortunately, a number of bad things often happen once the customer accepts the deal:
Expensive loan – The contractor does provide the financing, but the loan turns out to have terms...
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