Home equity loans are taken where the borrower uses the home as collateral. These loans may be useful for home repair, medical bills or even for education. Most home equity loans require good to excellent credit history. Home equity loans come in two forms, closed end and open end.
Both of the above types are considered as second mortgages as they are secured against the value of the property just like any mortgages of traditional type. Home equity loans are usually (but not essentially) for a shorter term than first mortgages. In United States, Home equity loans interest can be deducted on one's personal income taxes.
Closed end home equity loan
The borrower will receive a lump sum on sanction but cannot borrow further. The amount of money that can be borrowed are normally depends upon certain variables like appraisal value of the collateral, credit history of the borrower, income source of the borrower among others.
Normally, the borrower can take up to 100% of the appraised value of the home less any liens, although there are lenders that may go above 100% when doing over-equity loans. However, state law governs in this matter. Closed end home equity loans have fixed rates normally and generally amortized for periods up to 15 years.
Some home equity loans offer reduced amortization and at the end of the term a balloon payment becomes due. These larger payments may be avoided by paying minimum payment or by refinancing the loan.
Open end home equity loan
Revolving credit loan of this nature is also referred to as a home equity credit loan where the borrower has the option to choose when and how often to borrow against the equity in the property and the lender setting a initial limit to the credit line on the basis of some criteria as mentioned above for closed end home equity loans.
Similar to closed end equity loans, it is possible to borrow up to 100% of the value of the home less any lien. These line of credit are normally available up to 30 years at a variable interest rate. The minimum monthly payment may be as low as only the due interest rate and the interest rate is based on the prime rate plus a margin.
Home equity loan fees
Following are the list of possible fees that may apply to home equity loan: Appraisal fees, originator fees, stamp duty, title fees, arrangement fees, closing fees, early pay-off, and other costs are added in loans. Surveyor and valuation fees may also apply to loans, but some may get waved. The survey and valuation costs can also be reduced provided the borrower provides his own licensed surveyor to inspect the property under consideration.
Title charges in secondary mortgages or equity loans are fees for renewing the title information. The borrower should read and ask questions about the fees being charged to make himself sure about the fees since all these loans have some sort of fees tagged
Joe Kenny writes for Rebuild.org, offering home equity loan deals, they also have some great offers on mortgages
Visit today: Loans at Rebuild.org
Article Source: http://EzineArticles.com/?expert=Joseph_Kenny
Wednesday, February 27, 2008
Monday, February 25, 2008
Home Equity Loans - Bets Offer At Cheap Rates
Do you want to make the best use of your house? Yes! Till now, you might be considering the house only as a basic need but unaware to make the best use of it. But here is an opportunity for you. Here is a loan named home equity loans in which you can borrow loan amount against the market value of the house. As, it is a loan against the equity of collateral therefore it falls under the category of secured form of loan.
Fulfilling some personal ends becomes challenging when funds are inappropriate. But this loan scheme can let you materialize the ends without any hurdle. It becomes possible to execute demands in multiple. Loan amount is proposed on the equity of the collateral. But usually lenders offer 125% of the equity of the property. The large loan amount is offered against low and cheap interest rates and for a period of 10-25 years. In the market, you will find lenders ready to allocate home equity funds at negotiable interest rates. Furthermore, it is be beneficial for you if you collect the quotes and compare them minutely. Loan calculator is another medium that you can consider to procure your monthly installments.
All the numerous advantages and benedictions of home equity loans are unleashed even to bad credit holders. It can be regarded as a golden prospect for poor credit owners to recover the rampaged credit score and rebuild it for future transaction. Buying a luxurious car, decoration of house, weddings, holiday destinations, and much more personal ends can be executed in a single amount. Loan amount can be approved by sitting at home or office through the online application method. Online is a simple and fast method that let you access amount within short span of time.
Thus, considering this loan scheme will make you realize your long yearning desires without any hassle.
George Kane has no formal degree in finance, but years of work that he has put in the finance industry makes him perfectly eligible to be called an expert in financial matters. To find home equity loans, secured loans UK, secured personal loans, bad credit secured loan visit http://www.highrisksecuredloans.co.uk/
Article Source: http://EzineArticles.com/?expert=George_Kane
Fulfilling some personal ends becomes challenging when funds are inappropriate. But this loan scheme can let you materialize the ends without any hurdle. It becomes possible to execute demands in multiple. Loan amount is proposed on the equity of the collateral. But usually lenders offer 125% of the equity of the property. The large loan amount is offered against low and cheap interest rates and for a period of 10-25 years. In the market, you will find lenders ready to allocate home equity funds at negotiable interest rates. Furthermore, it is be beneficial for you if you collect the quotes and compare them minutely. Loan calculator is another medium that you can consider to procure your monthly installments.
All the numerous advantages and benedictions of home equity loans are unleashed even to bad credit holders. It can be regarded as a golden prospect for poor credit owners to recover the rampaged credit score and rebuild it for future transaction. Buying a luxurious car, decoration of house, weddings, holiday destinations, and much more personal ends can be executed in a single amount. Loan amount can be approved by sitting at home or office through the online application method. Online is a simple and fast method that let you access amount within short span of time.
Thus, considering this loan scheme will make you realize your long yearning desires without any hassle.
George Kane has no formal degree in finance, but years of work that he has put in the finance industry makes him perfectly eligible to be called an expert in financial matters. To find home equity loans, secured loans UK, secured personal loans, bad credit secured loan visit http://www.highrisksecuredloans.co.uk/
Article Source: http://EzineArticles.com/?expert=George_Kane
Thursday, February 21, 2008
How To Get The Lowest Rate Home Equity Loans
Home equity loan is the easiest way to get finance for any project of your choice, using your house value advantage. The equity of your House is based on the level of your investment on the property - it the payments you have made for your home. It is always an advantage to invest in a home because it will create a financial security for you. Every deposit you make for your home is a futuristic investment that will provide an opportunity for to finance any project in the future using your Home. Home equity loans are better than personal loans because its rates are lower. It is important to analytically negotiate to procure the lowest rate home equity loan so as to maximize profit.
The first thing to do is to clean up your credit history. Make sure you pay all your outstanding debts to have a good credit record; it is also possible to get a home equity loan with a bad credit record since your home is used as collateral in case you fall short. But a good credit record makes the process easier and faster: this period is the preparation period before starting your application. After preparing your credit records you can apply for them with the lowest rate possible.
The best way to apply for your home equity loan to get the lowest rate is by applying through the internet. Visit the websites of different financial institutions and individuals requesting for the loan, make sure you fill the application forms online. After this you will discover that many lenders will begin to approach you with different offers, in fact they will all be contending for you. This provides a perfect opportunity to go through all offers made choosing the offer with the best rates. More so, these financial institutions or individual knows that there are many competitors; hence they will offer their best.
After careful considerations you can pick the best offer of home equity loan with the lowest rate. From this exposition you will find out that the online application method of requesting for this loan if the fastest, easiest and cheapest since you can easily get your low rate loans.
For more information about Lowest Rate Home Equity Loan, feel free to visit us at: http://www.about-home-equity-loans.com/Lowest-Rate-Home-Equity-Loans.html
Article Source: http://EzineArticles.com/?expert=Arturo_Ronzon
The first thing to do is to clean up your credit history. Make sure you pay all your outstanding debts to have a good credit record; it is also possible to get a home equity loan with a bad credit record since your home is used as collateral in case you fall short. But a good credit record makes the process easier and faster: this period is the preparation period before starting your application. After preparing your credit records you can apply for them with the lowest rate possible.
The best way to apply for your home equity loan to get the lowest rate is by applying through the internet. Visit the websites of different financial institutions and individuals requesting for the loan, make sure you fill the application forms online. After this you will discover that many lenders will begin to approach you with different offers, in fact they will all be contending for you. This provides a perfect opportunity to go through all offers made choosing the offer with the best rates. More so, these financial institutions or individual knows that there are many competitors; hence they will offer their best.
After careful considerations you can pick the best offer of home equity loan with the lowest rate. From this exposition you will find out that the online application method of requesting for this loan if the fastest, easiest and cheapest since you can easily get your low rate loans.
For more information about Lowest Rate Home Equity Loan, feel free to visit us at: http://www.about-home-equity-loans.com/Lowest-Rate-Home-Equity-Loans.html
Article Source: http://EzineArticles.com/?expert=Arturo_Ronzon
Wednesday, February 20, 2008
Why A Home Equity Line Of Credit Makes Sense For Your Home Remodeling Needs
Making some changes around your home is a great way to help you enjoy your home even more. There is so much you could do to improve the living space, the kitchen, bathroom, or even add a garage or a new sunroom. Each of these costs money, and one of the most practical ways to finance your next project is by getting a home equity line of credit (HELOC). Here are some common sense reasons why this could be the best way for you to go.
Open An Account
A home equity line of credit will enable you to get an account with a credit limit. This will be established by the lender and will be based on your credit score, current indebtedness, amount of equity available, and your ability to pay back the loan. You will be given access to this line of credit by either a credit card or as a checking account.
Get One Loan - Many Purposes
The money in your account is yours to use however you want. If you have more than one home renovation project and are not sure of the total costs involved, then this is the simplest way to go about it. Or, if you want to do several things with the money - but not all at once, then, again, this is the perfect solution to those needs.
Out of the money your receive, you could do things like:
* Home renovations
* Consolidate Debt
* Cover medical expenses
* Take a vacation or trip
* College education
* Buy a car or boat
* Have emergency money
If you wanted, you could even do more than one of these things.
A home equity line of credit is usually an adjustable rate loan. This means that after a fixed rate period, the rates will change on a regular basis. The rate is based on the market rate and a margin.
Pay Interest Only On Portion You Use
One thing that makes a HELOC such a good investment is that you only pay interest on the money that you actually take out of the account. This makes it ideal for more than one project, and gives you the privilege of saving money on the portion you are not yet using.
In many cases, you have an option as to how you want to pay on your home equity line of credit. You could pay only the interest each month during the draw period. This period of time gives you a specified time in which you are allowed to take out more money. Another option is to make fully amortizing payments. This payment amount will be calculated monthly in order to keep up with how much you take out.
Different Amortization Methods - Pay Attention
Lenders have different ways to amortize their HELOC products when the draw period closes. You will need to know the method they will use to avoid surprises. One of these is to calculate fully amortizing payments and give you the balance of the 30 years to pay it off. Another way is to require a balloon payment at the end of the draw period. This means that you will probably need to refinance it. Some newer products simply roll the money over again to make it available to you - even without applying for it.
Whichever home equity line of credit you choose, be sure that you do some shopping to find a good deal. HELOC's vary quite a bit among lenders, and so do their terms. Be sure you find out about the margin rates and how it amortizes.
Joe Kenny writes for Rebuild.org, offering home equity loans, they also have some great offers on home refinance for any homeowners looking to release equity.
Visit: Loans from Rebuild.org
Article Source: http://EzineArticles.com/?expert=Joseph_Kenny
Open An Account
A home equity line of credit will enable you to get an account with a credit limit. This will be established by the lender and will be based on your credit score, current indebtedness, amount of equity available, and your ability to pay back the loan. You will be given access to this line of credit by either a credit card or as a checking account.
Get One Loan - Many Purposes
The money in your account is yours to use however you want. If you have more than one home renovation project and are not sure of the total costs involved, then this is the simplest way to go about it. Or, if you want to do several things with the money - but not all at once, then, again, this is the perfect solution to those needs.
Out of the money your receive, you could do things like:
* Home renovations
* Consolidate Debt
* Cover medical expenses
* Take a vacation or trip
* College education
* Buy a car or boat
* Have emergency money
If you wanted, you could even do more than one of these things.
A home equity line of credit is usually an adjustable rate loan. This means that after a fixed rate period, the rates will change on a regular basis. The rate is based on the market rate and a margin.
Pay Interest Only On Portion You Use
One thing that makes a HELOC such a good investment is that you only pay interest on the money that you actually take out of the account. This makes it ideal for more than one project, and gives you the privilege of saving money on the portion you are not yet using.
In many cases, you have an option as to how you want to pay on your home equity line of credit. You could pay only the interest each month during the draw period. This period of time gives you a specified time in which you are allowed to take out more money. Another option is to make fully amortizing payments. This payment amount will be calculated monthly in order to keep up with how much you take out.
Different Amortization Methods - Pay Attention
Lenders have different ways to amortize their HELOC products when the draw period closes. You will need to know the method they will use to avoid surprises. One of these is to calculate fully amortizing payments and give you the balance of the 30 years to pay it off. Another way is to require a balloon payment at the end of the draw period. This means that you will probably need to refinance it. Some newer products simply roll the money over again to make it available to you - even without applying for it.
Whichever home equity line of credit you choose, be sure that you do some shopping to find a good deal. HELOC's vary quite a bit among lenders, and so do their terms. Be sure you find out about the margin rates and how it amortizes.
Joe Kenny writes for Rebuild.org, offering home equity loans, they also have some great offers on home refinance for any homeowners looking to release equity.
Visit: Loans from Rebuild.org
Article Source: http://EzineArticles.com/?expert=Joseph_Kenny
Monday, February 18, 2008
What Is A Home Equity Loan?
Everybody has heard the phrase "home equity loan" but not everybody knows what it is. This article is for people who have asked "what is a home equity loan?" who were not satisfied by the dictionary's definition and would prefer a simple and easy to understand explanation.
So what is it? A home equity loan is a loan that uses the borrower's equity to secure the loan. Basically, the person who takes out this type of loan is putting their home up as collateral. It can be used for a variety of purposes and the interest is often tax deductible. Typically they are used to make home improvements though they are sometimes used for other purposes as well (paying off other debts, buying a car, etc). The loans are granted at either an adjustable rate or a fixed rate. The repayment plan is usually shorter than your first mortgage. Typically a mortgage takes thirty years to pay off while a home line of credit usually only takes fifteen.
Some tend to think this type of loan is an easy way out of a financial crisis, but the truth is that a it is a large risk to take. After all, your home is at stake here. If you default you could lose your home and then where will you be? You will also want to be very careful about the institution through which you obtain your loan. There are a lot of scams out there that you will want to be careful of. Make sure you always read the fine print.
Make sure you weigh all of the options that are available to you before you sign on that dotted line.
Get your questions answered today at http://www.100homeequity.com where you will find out what is a home equity loan and the lowest home equity loan rates. Don't pay too much for your 100% home equity loans.
Article Source: http://EzineArticles.com/?expert=Max_Suther
So what is it? A home equity loan is a loan that uses the borrower's equity to secure the loan. Basically, the person who takes out this type of loan is putting their home up as collateral. It can be used for a variety of purposes and the interest is often tax deductible. Typically they are used to make home improvements though they are sometimes used for other purposes as well (paying off other debts, buying a car, etc). The loans are granted at either an adjustable rate or a fixed rate. The repayment plan is usually shorter than your first mortgage. Typically a mortgage takes thirty years to pay off while a home line of credit usually only takes fifteen.
Some tend to think this type of loan is an easy way out of a financial crisis, but the truth is that a it is a large risk to take. After all, your home is at stake here. If you default you could lose your home and then where will you be? You will also want to be very careful about the institution through which you obtain your loan. There are a lot of scams out there that you will want to be careful of. Make sure you always read the fine print.
Make sure you weigh all of the options that are available to you before you sign on that dotted line.
Get your questions answered today at http://www.100homeequity.com where you will find out what is a home equity loan and the lowest home equity loan rates. Don't pay too much for your 100% home equity loans.
Article Source: http://EzineArticles.com/?expert=Max_Suther
Wednesday, January 30, 2008
The Difference Between Home Equity Loans and Home Equity Line of Credit
Using your home equity is a very savvy way to borrow large sums of money at a very low cost. While there are different types of loan products that lenders offer, the two most common and popular are the home equity loan and home equity credit line.
Before jumping into these two types of loan products, it is important to understand the nature of these two types of lending. Two terms that are extremely important are equity and collateral. Equity is a term that is used to describe the difference between the current appraised value of your home and the amount of the money that you owe (mortgage). For instance, if your home is currently valued at $300,000 and you own $100,000, your equity is equal to $200,000.
Collateral is another term that you should be aware of, whether in home equity loans or a home equity line of credit, it is important to note that you are putting up your home as collateral. Collateral is a way to secure your loan. If you are unable to repay your loan, the bank uses your home as collateral and can sell it to recoup its losses.
The main difference between these two different types of lending is that home equity loans are a one time loan for large sum of money. A home equity line of credit is an open account similar to a credit card where you can borrow money at various installments. Another important difference between both products is that the loan usually always has a fixed loan rate. The rate of the loan always stays the same for the life of the loan. In a home equity line of credit, the interest rate is variable and can increase or decrease throughout your repayment.
Most people use these two products very differently. For instance, for people looking to purchase one large item using their home's equity, a loan is preferred. For instance, loans are used for adding an addition to your home or paying for college tuition. A line of credit is usually used for smaller sums of money that are withdrawn over a period of time. For instance, many homeowners might use a line of credit to manage debt or to renovate their home piece by piece over the course of a couple of years instead of all at one time.
Connie Barker is the owner of several financial websites including those dealing with Bad Credit Loans, Personal Loans, and Online Loans
Article Source: http://EzineArticles.com/?expert=Connie_Barker
Before jumping into these two types of loan products, it is important to understand the nature of these two types of lending. Two terms that are extremely important are equity and collateral. Equity is a term that is used to describe the difference between the current appraised value of your home and the amount of the money that you owe (mortgage). For instance, if your home is currently valued at $300,000 and you own $100,000, your equity is equal to $200,000.
Collateral is another term that you should be aware of, whether in home equity loans or a home equity line of credit, it is important to note that you are putting up your home as collateral. Collateral is a way to secure your loan. If you are unable to repay your loan, the bank uses your home as collateral and can sell it to recoup its losses.
The main difference between these two different types of lending is that home equity loans are a one time loan for large sum of money. A home equity line of credit is an open account similar to a credit card where you can borrow money at various installments. Another important difference between both products is that the loan usually always has a fixed loan rate. The rate of the loan always stays the same for the life of the loan. In a home equity line of credit, the interest rate is variable and can increase or decrease throughout your repayment.
Most people use these two products very differently. For instance, for people looking to purchase one large item using their home's equity, a loan is preferred. For instance, loans are used for adding an addition to your home or paying for college tuition. A line of credit is usually used for smaller sums of money that are withdrawn over a period of time. For instance, many homeowners might use a line of credit to manage debt or to renovate their home piece by piece over the course of a couple of years instead of all at one time.
Connie Barker is the owner of several financial websites including those dealing with Bad Credit Loans, Personal Loans, and Online Loans
Article Source: http://EzineArticles.com/?expert=Connie_Barker
Sunday, January 27, 2008
What Makes Home Equity Loans So Attractive?
A home equity loan is a popular way to borrow larger amounts of money from a lending institution using your home as collateral. There are two terms that you should be familiar with when looking into taking out a home equity loan, they are equity and collateral. Equity is the amount of the money that your home is currently worth (appraised value), less any debt (mortgage).
Collateral means that when you take out a loan, you pledge something of significant value (in this case your home). Your home is a guarantee to the bank that you will pay back the loan. If you can not repay the loan, the bank can sell your home to recoup all its losses.
It is important to understand that putting up your home as collateral is a major reason why home equity loans are very attractive to lenders. Lenders find these loans very secure and because they are more secure than other types of loans they are able to give you extremely attractive rates. Usually home equity loans are at or a drop higher than normal mortgage rates. Plus in many cases, the interest paid for these types of loans are tax deductible.
Another reason they are attractive is that it allows home owners to borrow large sums of money, tens of thousands or even hundreds of thousands of dollars. You usually can't borrow that much money on a credit card or other type of loan. For instance, if you would like to renovate your home, go on a vacation of a lifetime, send your child or children to college or even use it as an investment or seed money to put down on other businesses, these types of loans can empower an individual very easily.
Home equity is also attractive to many homeowners because the repayment schedule for many of these types of loans can be 5 years, 15 years or even 30 years. For homeowners that would like to borrow large sums of money, but don't want to be burdened with large monthly payments, they make it very easy to budget monthly payments over a long period of time.
While home equity loans are extremely attractive loan products, it is important to make sure that they are right for you and your families specific circumstance. This loan is essentially a second mortgage and if you are unable to pay these types of loans, you can literally lose your home.
Connie Barker is the owner of several financial websites including those dealing with Bad Credit Loans, Personal Loans, and Online Loans
Article Source: http://EzineArticles.com/?expert=Connie_Barker
Collateral means that when you take out a loan, you pledge something of significant value (in this case your home). Your home is a guarantee to the bank that you will pay back the loan. If you can not repay the loan, the bank can sell your home to recoup all its losses.
It is important to understand that putting up your home as collateral is a major reason why home equity loans are very attractive to lenders. Lenders find these loans very secure and because they are more secure than other types of loans they are able to give you extremely attractive rates. Usually home equity loans are at or a drop higher than normal mortgage rates. Plus in many cases, the interest paid for these types of loans are tax deductible.
Another reason they are attractive is that it allows home owners to borrow large sums of money, tens of thousands or even hundreds of thousands of dollars. You usually can't borrow that much money on a credit card or other type of loan. For instance, if you would like to renovate your home, go on a vacation of a lifetime, send your child or children to college or even use it as an investment or seed money to put down on other businesses, these types of loans can empower an individual very easily.
Home equity is also attractive to many homeowners because the repayment schedule for many of these types of loans can be 5 years, 15 years or even 30 years. For homeowners that would like to borrow large sums of money, but don't want to be burdened with large monthly payments, they make it very easy to budget monthly payments over a long period of time.
While home equity loans are extremely attractive loan products, it is important to make sure that they are right for you and your families specific circumstance. This loan is essentially a second mortgage and if you are unable to pay these types of loans, you can literally lose your home.
Connie Barker is the owner of several financial websites including those dealing with Bad Credit Loans, Personal Loans, and Online Loans
Article Source: http://EzineArticles.com/?expert=Connie_Barker
Wednesday, January 23, 2008
Home Equity Loans - A Low Cost Option For Financial Assistance
Your home may yield a much comfortable option to avail a financial help. The equity of your home can be used to arrange a good sum for your needs. You can find this option very comfortable; as such borrowers are always preferred for granting financial help. The equity of the home is used as collateral and you are provided with a low cost financial grant. You can avail these financial help in the form for home equity loans.
Home is one of the preferred options that are used to avail a loan. Usually your home has some obligations towards the lender and not free for its total value. So, when you need a further financial grant the equity of the home is used as collateral. The equity of a home is that value which is left after total obligations with a home. This means equity is the real asset for you when you go for loan against your home.
They can be used for a number of purposes you have. You can invest the amount on buying a car, renovation of the home, wedding cost, luxury holiday and debt consolidation.
Amount is not a matter of constraint with home equity loans. It is totally dependant on the equity's value of your home. You can avail up-to 100% of your equity's value as amount. However, the range of amount that is generally provided with them vary from £ 3000 to £ 100000. For the repayment you always get a convenient schedule for it. Here, you are provided with a long stretched repayment durian that can be of up to 25 years.
You always get a fair rate with home equity loans. The rate of interest is lower to other loans. You can also find a differed rate of interest with different lenders. So, you can conduct an online comparison to find the best option. Several lenders are providing services online to reduce the hassle at processing.
You can avail them even if you have bad credit. Borrowers with CCJs, IVAs, arrears, defaults, etc. are not deprived for this loan. However, you can be charged with a somewhat higher rate of interst for this.
You always need a loan that incurs a low cost for you. With the home equity loans you find it easily. Moreover, the equity of the home increases with the market value, that eventually reduces your burden to a considerable level.
Dina Wilson is an expert loan advisor at online home improvement loan. She has done MSc Management and Finance from University of Whales.To find Home Equity Loans, home improvement loan, home loans, online home loans visit http://www.online-home-improvement-loan.co.uk/
Home is one of the preferred options that are used to avail a loan. Usually your home has some obligations towards the lender and not free for its total value. So, when you need a further financial grant the equity of the home is used as collateral. The equity of a home is that value which is left after total obligations with a home. This means equity is the real asset for you when you go for loan against your home.
They can be used for a number of purposes you have. You can invest the amount on buying a car, renovation of the home, wedding cost, luxury holiday and debt consolidation.
Amount is not a matter of constraint with home equity loans. It is totally dependant on the equity's value of your home. You can avail up-to 100% of your equity's value as amount. However, the range of amount that is generally provided with them vary from £ 3000 to £ 100000. For the repayment you always get a convenient schedule for it. Here, you are provided with a long stretched repayment durian that can be of up to 25 years.
You always get a fair rate with home equity loans. The rate of interest is lower to other loans. You can also find a differed rate of interest with different lenders. So, you can conduct an online comparison to find the best option. Several lenders are providing services online to reduce the hassle at processing.
You can avail them even if you have bad credit. Borrowers with CCJs, IVAs, arrears, defaults, etc. are not deprived for this loan. However, you can be charged with a somewhat higher rate of interst for this.
You always need a loan that incurs a low cost for you. With the home equity loans you find it easily. Moreover, the equity of the home increases with the market value, that eventually reduces your burden to a considerable level.
Dina Wilson is an expert loan advisor at online home improvement loan. She has done MSc Management and Finance from University of Whales.To find Home Equity Loans, home improvement loan, home loans, online home loans visit http://www.online-home-improvement-loan.co.uk/
Wednesday, January 9, 2008
Home Equity Loan vs Refinancing
Home equity loan and refinancing are two excellent ways that can help you manage your finances. However, it may prove difficult to choose one from the other and should depend on what your financial goals are. You can opt for the lower payment schemes of cash-out refinancing, or you can choose the great tax benefits offered by a home equity loan. The choice, however, does not prove to be as simple as this. Here is a comparison of these two types of loans to help you see which one is right for you.
Cash-out refinance simply means that you are refinancing your existing mortgage in order to lower your monthly payment and/or your current interest rate, and get some additional cash for other pressing reasons such as for home improvement, renovation, and the likes. If you are lucky to choose the right timing, you may be able to get all these with cash-out refinancing. Say, your home is valued at $300,000 and your existing mortgage balance is $200,000, your home equity remains at $100,000. You are free to borrow the remaining equity as you deem necessary.
Home equity loans are usually provided in two kinds: the home equity line of credit and the home equity installment loan. A home equity line of credit line means that you are borrowing against the value of your home; your home is your collateral to the credit. Home equity plans are usually set at a fixed time; say 10 years but with variable loan rates. Your interest rate and the annual percentage rate of your mortgage can move up and down depending on the market trends. During the specified time, you are free to obtain the cash when you need it, and pay only for what you happen to spend. Some mortgages are offered with payment of full outstanding balance, while others allow repayment over a fixed time.
On the other hand, an installment loan is a loan that has a fixed rate that stays the same all throughout the rest of your home equity loan terms. Also called the closed end home equity loan, you amortize your loan for periods lasting up to about 15 years. In this kind of loan, you usually receive a lump sum at closing depending on your home value, and you can not borrow further afterwards.
Which is better?
Remember that interest rates do not usually behave normally, much as you want them to. When this happens, home equity loans may actually prove cheaper than refinancing, although they are potentially riskier. Choosing what is better between the two should depend on individual circumstances. For example, if you plan to pay off your mortgage and do not need as much money, you can go for a home equity loan to get lower rates and shorter terms. On the other side of the fence, with cash-out refinancing, you can get all your money up front and simply pay off interest and principal on a lowered monthly basis as agreed upon, with no frills. Weigh carefully based on what your financial objectives are and choose one which you think will give you a fairer deal.
Want to know how to go about with your current finances? Need some financial advice on what to do with your home mortgage? We can help! Visit Home Equity Loan or Home Equity for more information.
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