As a homeowner there is a fair chance that you have equity in your home. Equity is the difference to what you owe to what your home would fetch on the market if you sold it. Lenders often will consolidate your debt by using the equity in your home. This means that a new mortgage is written to include the debt you are consolidating into your home loan, which is usually attractive as the home loan interest rate is usually much lower than the interest rates of the loans you are consolidating. Another bonus would be that the interest rate for loan borrowings of under $100,000 would be tax deductable. The loan amount will vary between lenders, but as an approximate average it would be 80% of the market value in your home.
There are two types of home equity loans, the first one is called a home equity loan and it can be either a fixed or variable rate. Payments are usually made on a monthly basis and payment amounts can rise or fall depending on the interest rates as they rise and fall. The second time is known as a home equity line of credit. This type of loan varies from the first one as it has a predefined limit of how much credit you have available in your home to draw down on. This means that as you pay of part of your home loan, there is an approved level of credit that you can draw down on. It is an ongoing approved line of credit. With taking out a home equity loan still be careful that you can pay the monthly payment even if interest rates rise otherwise your house could be seized by the financial institution if you fall behind in your payments and cannot met the monthly payment amount.
Tom has been writing for many years now. Not only does this author specialize in financial matters, you can also check out his latest web site on http://hjcmotorcyclehelmets.info/ which reviews and lists the best motorcycle helmets for motorcycle safety.
Article Source: http://EzineArticles.com/?expert=Tom_Peters
Saturday, November 28, 2009
Home Equity Loans Vs Home Equity Line of Credit
Home equity loans have increased in the recent times. If a person decides not to refinance his first mortgage and instead wants to have cash out of debt consolidation, then companies are lending their helping hand by lowering the refinance cost and increasing their homes' Equity. A home owner can borrow against the value of his house by two ways. One is called home equity line of credit and the other one is a home equity loan. Both are generally considered to be a second mortgage. While with the first one a person can draw amount up to a predetermined limit, whenever there is need for money. The other option provides for taking a lump sum by paying a fixed payment monthly over a period of time.
The amount drawn in each case will be based on several factors such as the income of the borrower, his debts if any, value of his home and his credit history. Both types of loans are appealing in their interest rates because they are secured against home. Often both these loans are tax deductible. Choosing either option depends on individual financial conditions. If a person needs to meet the expenses like college fees or medical bills, then Home Equity Line of Credit will best suit him. But both loans carry higher interest rates as compared to first mortgage.
With these loans, there are again two more options available. One is adjustable rate and the other is a fixed rate. And there will be closing costs which must be taken in to consideration. One can be free from any worry about increasing costs should interest rates rise. Home Equity Line of Credit provides lower initial rates as compared to loans. But there is a risk of more interest rate due to its fluctuating rates. But there are no closing costs for these loans. If a person gets tempted with the second type of loan, then he must be cautious as to not get in to more debt. Failing to repay will give way for the risk of losing his house.
To qualify for this credit, a person needs to provide proof of income, home ownership, and details about how much equity he has in his home. At least 20% of the value of the home must be paid off. An appraisal will help a lot.
For more information about California Refinance Loans.
Article Source: http://EzineArticles.com/?expert=Aekkapol_Kongvicheinwa
The amount drawn in each case will be based on several factors such as the income of the borrower, his debts if any, value of his home and his credit history. Both types of loans are appealing in their interest rates because they are secured against home. Often both these loans are tax deductible. Choosing either option depends on individual financial conditions. If a person needs to meet the expenses like college fees or medical bills, then Home Equity Line of Credit will best suit him. But both loans carry higher interest rates as compared to first mortgage.
With these loans, there are again two more options available. One is adjustable rate and the other is a fixed rate. And there will be closing costs which must be taken in to consideration. One can be free from any worry about increasing costs should interest rates rise. Home Equity Line of Credit provides lower initial rates as compared to loans. But there is a risk of more interest rate due to its fluctuating rates. But there are no closing costs for these loans. If a person gets tempted with the second type of loan, then he must be cautious as to not get in to more debt. Failing to repay will give way for the risk of losing his house.
To qualify for this credit, a person needs to provide proof of income, home ownership, and details about how much equity he has in his home. At least 20% of the value of the home must be paid off. An appraisal will help a lot.
For more information about California Refinance Loans.
Article Source: http://EzineArticles.com/?expert=Aekkapol_Kongvicheinwa
Equity Loan Modification - Getting Yourself the Money You Need to Avoid Foreclosure!
Are you facing foreclosure and you have no idea what to do? Do you want an option that is now available that will allow you to avoid the foreclosure you are currently dealing with? There is a new program called an equity loan modification and it can help you.
The first thing you need to know is how scary foreclosure can be and how bad it would be for you if you were to lose your home. You would be in a bad position and you would not be happy dealing with what you would have to deal with. This could make your life more difficult than you want it to be and you do not need that trouble at all.
The second thing about an equity loan modification is that it can save you from having to deal wiht the courts and everything that goes along with a foreclosure. This is a difficult thing to deal with and you will have to if you do not use something like an equity loan modification to help you out of this situation.
The last thing to know is that most people will be able to use this program to help them save thier home. This will save you from having to find a new place and find a way out of your current situation. The rent you would pay in a new place will not be worth it and this would just make your life much harder than it has to be.
Click Here to discover exactly how to Save your Home from Foreclosure by Modifying your Mortgage!
Article Source: http://EzineArticles.com/?expert=Gressly_Stevens
The first thing you need to know is how scary foreclosure can be and how bad it would be for you if you were to lose your home. You would be in a bad position and you would not be happy dealing with what you would have to deal with. This could make your life more difficult than you want it to be and you do not need that trouble at all.
The second thing about an equity loan modification is that it can save you from having to deal wiht the courts and everything that goes along with a foreclosure. This is a difficult thing to deal with and you will have to if you do not use something like an equity loan modification to help you out of this situation.
The last thing to know is that most people will be able to use this program to help them save thier home. This will save you from having to find a new place and find a way out of your current situation. The rent you would pay in a new place will not be worth it and this would just make your life much harder than it has to be.
Click Here to discover exactly how to Save your Home from Foreclosure by Modifying your Mortgage!
Article Source: http://EzineArticles.com/?expert=Gressly_Stevens
Time to Fix That Equity Line
For years every bank under the sun was pushing clients to take out the home equity line of credit for any reason. Now is the time to get your bill behind upon track, reset your idea of reducing debt and fix in that line of credit into the traditional loan.
How Lenders Decide Whether Or Not to Accept Home Equity Loan Applications
Everybody would like to know how lenders confirm either or not to accept home equity loan applications. This article describes how lenders confirm either or not to accept home equity loan applications. There have been no predefined biases, nor any pointless selection of applications. All applications have been closely scrutinized to identify either or not a borrower can unequivocally pay off a home equity loan that he/she is seeking.
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