Home Equity Loans – second mortgage

Bryan Burbank asked:




A Home Equity Loan can be a great way for you to borrow money using your house as collateral. Most people will use this type of loan so that they can make home improvements or if you need money fast. The best thing about this type of loan is that you are almost guaranteed to be approved as long as you have some equity in your house. Also you will be able to get a much lower rate of interest using this type of loan as apposed to a standard loan.

Most home equity type loans will require that you have a good to better than average credit rating to qualify for the loan. There are basically two type of equity loans that you can get which are open and closed ended. The closed ended loan allows you to borrow money against your home and get a lump sum and that is all you can borrow. The maximum amount they will allow you to borrow is determined on your credit history and the equity that you have in your house. Commonly you can borrow the full appraised amount of your house less anything that is owed on it.

A Open ended home equity loan allows you to have a revolving credit loan which is basically a line of credit that you can use when you need it. You can set a limit on the amount you can take out of your home when you need it ands this makes it very convenient when you are in need of money.

It is important to understand that there are fees associated with getting a home equity loan and basically it is similar to getting a regular mortgage loan because the fee structure is similar.

Remember that getting a home equity loan is fast and easy and can really help you if you need money or you are wanting to fix up your house. During times of great home appreciation the home equities market is usually very busy.

Tim

Kenetik30 asked:


my girlfriend has a condo in los angeles which is worth 300K. She tried to start a business and quit her job 2 years ago. well suffice to say the business is and was not going too well so she went out and got a home equity loan of 50K. She squandered that money and got 25K line of credit. Mind you she doesn’t have any income (REAL JOB) coming in except some money coming from her business and her credit lines.
I just found out she has an ARM mortgage on her condo which she was paying interest only and now it’s about to go up to 2500 dollars a month. She finally got off of her but and got a real job paying pretty well for L.A. and She decides to rent out the place and move in with a friend to help pay for mortgage, line of credit, and equity loan because she is upside down on the property. Now that she has a tenant in her condo, she is now trying to buy a foreclosed house with her friend. Is this possible with all the mortgage dept she has? She has only been working for 2 1/2 months.
side note:
she has a credit score of 801.

she pays all of her bills on time and in full.

she was late a couple of times on her line of credit loan.

Is this legal? Can this be done?

LEOPOLDO

Alan Lim asked:


If you are a homeowner, you surely have heard so much about home equity loan. What is this all about? Owning a home is not only a major turning point in your life, but is actually an investment that will increase in value over time. In time, your home value would increase. This means that your house which originally cost you $150,000 10 years ago can now be sold for $200,000.

Consequently, if you purchase a home and pay for it through home mortgage, you are slowly building on home equity. It is simply the difference between the current value of your home and the value you still owe your lender on the mortgage. You can then expect your home equity to increase in two ways – it increases as you pay your monthly mortgage payments, and as the market value of your home increases in time.

Home equity is actually one of the most important advantages you can get when buying a home. It is a great financial resource and your money stored in the bank. You can borrow against it through a home equity loan in cases when you badly need some extra cash. If you want to take on a home equity loan for college tuition, home renovation or to pay off your debts, you have two types to choose from: a second mortgage (known as the traditional home equity loan) and the home equity line of credit loan. What are these two all about?

A second mortgage loan merits you lump sum money which is based on the equity built on your home. On the other hand, a line of credit loan entitles you to a credit card or a check book with a corresponding maximum credit amount that you can use for purchases. The amount you can spend is again based on your home’s equity.

Whichever type it is, is low interest and tax deductible. Thus, with all else being equal, the choice of which one to choose is entirely up to you. It will depend on your needs for the moment. If you need the lump sum cash to pay for big purchases, then a second mortgage will do. On the other hand, if you need to spend it in small but regular amounts, then you might find a line of credit more suitable.

However, it is still very important for you to bear in mind that when taking out a home equity loan, your lender can repossess your home anytime if you fail to pay the necessary dues. If you fail to pay your monthly payments for a while or if you fail to pay your home equity loan in full as agreed upon, your lender or your bank can take your house away and use its current value to get what you owed them. As in all mortgages, make sure that you assume the responsibility to pay for what you need to, or you stand the risk losing your home.



BRYON

Wandering Wonderer asked:


I recently attended my CH 13 bankruptcy meeting of creditors. While there, you have to sit through other people’s file review with the trustee. I heard one couple get asked if their lawyer was filing a motion for “adversary” or “aversion” or something (wasn’t paying complete attention initially). As the trustee continued, he mentioned this would remove their home equity line of credit loan which was being secured by their home since they owe more than the home’s value (now I’m paying attention). I discussed this with my lawyer and he said it’s “possible” but there are additional fees to file a motion ($thousands) and even more if the case has to actually go to trial ($10s of thousands). Of course I am skeptical because my lawyer never informed me of this option before. I am just wandering if anyone else has any knowledge of this and what was the actual term so that I can do a bit more research. Thanks.

WILBURN

Greg Smith asked:


Deciding between a home equity loan and a second mortgage should not be that difficult a decision. These are two very different things that each have their own benefits.

A second mortgage is the option of choice for those who are facing an emergency situation that needs to be dealt with now. If something has cropped up that requires a large amount of money at one time then this is the perfect solution.

When you are approved for a second mortgage you will receive one lump sum that you can use for anything that you want. You can use it to fix the car, repair the roof, buy a boat or just go on a fabulous vacation.

Once the money you get from the second mortgage is gone, it is spent and no matter how you make your payments, no more money will become available to you, not even if you pay it back more quickly.

A home equity line of credit loan on the other hand is often revolving. This actually makes it quite similar to a credit card. These loans can be used for anything just as the second mortgage can, but anything you pay back above the interest owed will go back into the account and you can use it again when needed.

Home equity lines of credit loans and both of them have terms of up to 15 years. If you sell your home before you have paid the line of credit back in full, you will then have to do so upon completion of the sale. This should not be a deciding factor between a second mortgage or a loan because this applies to both.

The home equity loan option is good for people who like to have that cushion available to them to use on a regular basis.

Of course to get approved for a home equity loan or a second mortgage you will have to have a home that has some value. If you already owe a large amount of money on your home then you will not be able to get approved.

The most common place for one to get another mortgage or a line of credit is the bank. You can make an appointment with your bank as soon as possible and start filling out the necessary forms in order to see if you quality for this type of financing.

If you decide to use the money you get from either of the above options to improve your home you will find that you are actually adding value to it. When it comes time to sell your house and property you could actually successfully ask more for it. In this way you could make money off of choosing a second mortgage or a home equity line of credit.



ISAAC

uncleeuve asked:


I need a home equity line of credit loan
Chase has taken away my line of credit.This is not because of my credit score or equity.They are getting out of the second mortgage business slowly but surely.My credit score is over 700 and my equity is fine.I would appreciate any feedback on any banks or lenders
11 hours ago – 4 days left to answer.

ARMAND