A Home Equity Loan May Fit Your Needs

A Home Equity Loan May Fit Your Needs
by Helpnets.com

Many people today are feeling the economic crunch and may be interested in getting a loan. You may be in the position that you must consolidate your debts, repair your home, pay for education of your children, pay for medical care, or purchase a large item. You may perhaps be eligible to apply for a home equity loan that would help you in being able to achieve your goal.

What is this type of loan and how is it different? As the borrower you use the equity that you have amassed in your home against receiving a loan. Your home, which is your asset, becomes your collateral. Therefore the lending institution puts a lien on your property reducing your equity.

How would you qualify for this loan? One of the first things that the lender will look into is your credit history. The better your credit the easier it will be to get the loan. You must have a good credit score.

Then there are two ratios that come into play towards your eligibility. The debt to income ratio and loan to value ratio. Your debt to income ratio should be under 36%, which indicates that debt is less than 36% of your income. Loan to value ratio is 80% or less which indicates that loan can be 80% of that total value of your property less any other liens or mortgages on the property.

The term of the equity loan is usually for a shorter period than your traditional mortgage. In some countries you can deduct your loan interest on your income tax return. Generally, this loan is a lump sum payment usually, but not always, with fixed interest rates.

You should be aware that these loans are secured loans. This means that if you default the creditor would take the asset, your property, that you used as collateral. Your heirs would not inherit as the lender would own the asset. They could sell it to get the original loan amount reimbursed.

An attractive thing about these loans is that the interest rates are low. They are higher than a first mortgage but lower than interest on credit cards. There are closing costs in obtaining this kind of loan. Some of the costs that you will find are the cost to have the property appraised, the loan application itself, and the cost for a title search. It is possible that this is the type of loan that would fit your needs.

Copyright 2010 – Helpnets.com

June 22, 2010  Tags: Home Equity Loan  Posted in: Home Equity Loan  Comments Closed

Do You Really Need a Home Equity Loan

Do You Really Need a Home Equity Loan?
By William McNutt

Your equity is the amount your home is worth, on the market, minus the amount you owe to your mortgage broker. For example, if your property is worth $200,000 and the balance you owe your mortgage broker is $100,000, then your home equity – the part of your property that you own free and clear – is $100,000.

A home equity loan is a loan that uses the equity in your home as collateral. That means you are using your home as a guarantee that you will repay the loan. Before you even consider borrowing against your home equity, you need to understand that the loan reduces your equity by the amount of the loan and that if you do not repay the loan, you could lose your house.

These loans have advantages and disadvantages compared with other kinds of borrowing. You should consider the “Pluses” and “Minuses” of borrowing against the equity in your property before apply for a equity home loan.

Pluses

*The interest paid on a home equity loan is tax-deductible, just like the interest on your mortgage. This of course is not the case with credit card interest.

*Equity home loan rate may be lower than other kinds borrowing, such as credit card debt, because you’re using your property to guarantee the loan will be repaid.

*A home equity loan gives you a source of funds for important big purchases: a college education, home improvement, a medical emergency, or other emegencies that may arise.

Minuses

*Your payments on your home loan must be met or you could lose your home.

*Often you will have to pay closing costs, which can be substantial, this is money which will not be recoverable and will diminish your loan value.

Having excess equity in your home will make you a target of unscrupulous sales tactics designed to get you to rush into an expensive loan you may not need. If you feel like you’re being pressured to borrow, just say no – always take your time when you take out a home equity loan.

There are reasons that make a home equity loan a good choice but also reasons that are not good. You should consider them wisely.

Good reasons to take out a home equity loan.

*Improving your finances – A home equity loan can consolidate your debts, by paying off high-interest credit cards or other high interest loans which are not tax deductible.

*Investing in your home – You can use a loan to increase the value of your home by using it for needed home improvements or repairs.

*Investing in your future – Home equity loans can help finance an education or start a business.

Bad reasons to take out a home equity loan.

*Spending the money on luxury items – Don’t risk your house to buy that new car, big boat or take an expensive trip. You should save until you can afford it.

*Using the money for living expenses – If you’re spending more than you’re earning day after day, a loan will only delay the “inevitable.” Try to find ways to cut your expenses instead. A credit counselor can help.

*Loan the money to a friend or relative – Remember, it’s your house that’s on the line. Don’t let a friend or relative pressure you to take out a loan for them. If they don’t pay you back, they lose nothing – but you could lose your home.

If you’re thinking about taking out a home equity loan as a last resort to get out of serious financial trouble, DON’T. Chances are, you’ll just run up your debt again and will soon be just as bad off as you are today, and possibly lose your home as well. Get help instead! A credit counselor can help you improve your finances at little or no cost to you.

This article may be freely distributed and reprinted as long as the author’s information and web link are included at the bottom of the article.

Copyright 2005. William McNutt. All rights reserved.

About the Author

Bill McNutt is a freelance writer and web designer. Having retired as an Aerospace Engineer after 30 years, he became fascinated with web site design, retirement got boring. He now writes articles about his website contents and adds to his websites. For more info Click Here [http://www.truckasseccoriesguide.com/camping.html]

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June 20, 2010  Tags: Home Equity Loan  Posted in: Home Equity Loan  Comments Closed

Home Equity Loan Interest Rates Answers To Your Questions

Home Equity Loan Interest Rates – Answers To Your Questions
By Dean Shainin

Home equity loans can be a great source of credit if you are in need of cash. There are several advantages in obtaining a home equity loan. You can use the extra money for home improvements, payment of high interest debts, education, and car loans.

Home equity lenders do not charge the same home equity loan interest rates. The fact is that each lender sets the home equity loan interest rates based on their own standards.

The home equity loan interest rates of these lenders differ from a single point or more. There are lots of home equity lenders on the internet. Using the internet you can compare the home equity loan interest rates of each home equity lender.

Homeowners can request home equity loan quotes to these online home equity lenders. Some of the home equity loan interest rates depend on the credit rating of the homeowner. This score (credit rating) is used by lenders to determine whether or not to approve the loan of the borrower.

3 Tips Regarding The Home Equity Interest Rates That Some Lenders Offer

1. Always get hold of all the information of the home equity loan fees and charge before you sign the contract. Some home equity lenders feature packages. The home equity loan interest rates of professional packages are usually discounted by 0.5 percent.

2. Some lenders of home equity loans offer low introductory rates that might look like a great deal but these deals usually revert automatically to higher home equity loan interest rates.

3. Don’t just settle for low home equity loan interest rates when comparing home equity lenders. Lenders that offer low interest rates tend to have stiffer terms. Compare lenders that offer the same basic loan terms.

Home Equity Loan Questions And Answers To Consider

What do we really know about home equity loans? It is highly recommended that all consumers should ask the lenders a series of home equity loan questions before deciding upon a loan. Compare all the information of the lenders that you have gathered.

If there are some things that you do not fully comprehend, like the home equity loan terms and conditions, do not hesitate to ask, let the lender explain to you thoroughly the home equity loan questions that you have asked.

Always take heed of the fees, including the application fees, loan processing fees, underwriting fees, funding fees, appraisal fees and especially the document preparation and certification fees.

One of the most important home equity loan questions that you should ask is your “credit score”. Credit score or credit scoring is a system that creditors use in order to clarify whether the creditor would give you credit. It has all the information regarding your previous credit experience – whether or not you have paid on time, outstanding debts, and age of your account – gathered from your credit applications and reports. This way, the creditor can compare the information of the performance of your account to similar profiles. It is advisable that you negotiate with more than one lender and before signing anything, read the loan closing papers thoroughly and carefully.

Asking for the repayment period is also one of the most important equity loan questions. Because the value of your home can either increase or decrease during that period. If the value of your home increases then you can use the extra money to increase the value of your home. With this extra money, you can also finance other requirements like education and medical bills.

Probably the most important of all home equity loan questions is the amount that you can borrow. Remember, no loan program is the same. There are lots and lots of lenders that provide adequate home equity financing.

Dean Shainin is a consultant specializing in home loans, strategies for loan financing, home equity loans, and consolidation loan information. To see a list of recommended loan companies, tools, resources, free quotes and articles, visit this site: best home mortgage loans

Get free valuable online tips for saving money from his: best home equity loans website.

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June 20, 2010  Tags: Home Equity Loan  Posted in: Home Equity Loan  Comments Closed

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