One of the latest and saddest identity theft trends in the last couple years are identity thieves using home equity lines of credit to tap the money right out of your home – and you may not even know about it. It’s better you tap into it before someone else does! Here we’re going to talk about how the scam works and what you can do to protect yourself against identity theft. While Canadian mortgages have a lot of protections there are still some cracks in the system where these people can still get through.
What is a Home Equity Line of Credit?
A HELOC is a line of credit fueled by the equity in your home. Unlike a second mortgage or home equity loan, you can use it like a credit card and borrow against your equity when you need to. You won’t be trapped with a lump sum that you have to spend right away, but it’s important to really understand how they work before you take one out.
How Do They Work?
It’s a line of credit, not a loan, so you can borrow and repay as much as you need for a set amount of time. You’re going to need to know how to keep the credit line open on your home so you can use it for the future. You don’t want to blow your equity on things that don’t matter, but there are many great ways to get a return like investing in home improvements. Since most people don’t think of HELOCs, thieves are able to get one, tap into it and drain your home before you even know what’s happened.
How Do Thieves Steal Equity?
If you’re a thief and you don’t want to work hard, what are you going to do? The best way to steal is when no one’s looking – when was the last time you looked at your equity, especially when your home was completely paid off? It’s the perfect scam. The banks are always eager to do a HELOC on a home that’s been paid in full and you won’t know what happens until the debts come due. This is why it’s so important to keep on top of your credit report and to check for new lines of credit being opened in your name every couple months.
What Can You Do if This Happens to You?
If someone else has opened a home equity loan on your home, you need to report it to the bank right away. When a merchant completes a fraudulent transaction they’re the one that pays, not you. The faster you work with them the better they’ll be able to respond to equity theft. Most homeowners don’t know until it’s too late to do anything, so it’s always important to keep on top of your credit report.
If you’re interested in a home equity line of credit but don’t want to pay an arm and a leg, apply for a home equity line of credit today.