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Three More Loans to Beware

Not all questionable loans come with triple-digit interest rates. Some have APRs that seem almost reasonable. But there may still be traps aplenty:

125 or high-loan-to-value mortgages. Lenders who specialize in such loans promise to give you a mortgage or home equity loan for more than your house is worth (typically up to 125% of the home's value, which is where the loan gets its name). These loans often come with steep upfront fees (10% of the loan amount isn't uncommon) and high interest rates. Not all of the interest is deductible, since you can't write off interest on loans worth more than your house. And you'll really be in a jam if you have to sell your house for less than the mortgage; you'll still owe the difference between the sale price and your loan balance.


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