Home Equity Loans - second mortgage

glady8093 asked:

MORTGAGE LOANS Bad Credit Mortgage If you’re a first time home buyer, we offer a variety of loan programs to assist you in making your first time home purchase decision - even with bad credit problems or after bankruptcy. Bad Credit Home Equity Loan Our online application is the fastest and…

Laurie

Steven Walters asked:




If you need a way to free up the cash equity in your home one way to do so is through a 100% home equity loan. With interest rates as low as they are currently the home equity loan has been a very popular option for getting more cash and a 100% home equity loan takes that even one step further. This type of home equity loan might not be right for you, but you can decide by asking yourself a few easy questions.

How Low is the Interest Rate?

You always want to get a low interest rate on any loan, but this is especially true of a 100% home equity loan. Make sure you can’t get a better rate by getting a personal loan or tapping your credit cards. It’s highly likely that the interest rate on your home equity loan will be the lowest you can find, but it never hurts to check first and make sure. Go online and request quotes from a variety of online lenders to get a good idea of what their current home equity rates would be for you.

You should also know that by borrowing against 100% of your homes’ value you won’t qualify for the lowest rates, but the rate should still be lower than that on credit cards and even personal loans. In addition you get a tax savings by taking a home equity loan, so factor that into your decision as well.

What are the Benefits of a Home Equity Loan?

Your personal benefits will be determined by what you use the cash for. If you’re paying off high interest credit cards or making home improvements that will boost the value of your home then by all means you should consider a home equity loan. On the other hand, if you want to use the cash to finance a trip around the world or to go on a huge shopping spree then you should probably reconsider. Basically, as long as you’ll be improving your financial standing with the proceeds of your home equity loan then it makes good sense for you. If there is no financial benefit then you should forgo the equity loan and simply save for that purchase.

How Long Will You Stay in Your Home?

The length of time you plan on living in the same house can make a big difference in whether or not you want to consider getting a home equity loan. By taking all of the cash out of your home now you are ensuring that there won’t be much left if you sell the house in the next few years. Especially with the declining house values you could actually end up owing more than the home is worth.

While it can make sense for some, you should consider carefully before taking a 100% home equity loan. Once you’ve taken all the cash out of your home equity you no longer have that cushion and you might end up missing it should you have an emergency or even a good opportunity that you would need cash for later. If you’re benefiting financially then it could be a good move. In any case you’ll want to get quotes from several lenders before agreeing to any home equity loan.

Esther

Anemone2121 asked:

MORTGAGE LOANS Bad Credit Mortgage If you’re a first time home buyer, we offer a variety of loan programs to assist you in making your first time home purchase decision - even with bad credit problems or after bankruptcy. Bad Credit Home Equity Loan Our online application is the fastest and…

Bill

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

Brandon Cornett asked:




Home equity loans remain one of the most popular financing tools among homeowners. It can give you quick access to cash by leveraging the equity (or ownership) you have in your home. It can be an effective way to finance a home renovation, education costs, or even a second home.

But these loans also get a lot of homeowners into trouble each year, and in the worst-case scenarios they can even result in foreclosure and loss of the home. On top of that, there are some common scams associated with equity loans and lines of credit. The Federal Trade Commission (FTC) is constantly tracking the latest scams and warning homeowners about them. Here’s a summary of some of the more common scenarios you should watch out for…

1. Equity Stripping

In this scenario, the lender will actually help you “pad” your stated income on the loan application form in order to qualify you for the loan. “Why would they do such a thing?” you might ask. Predatory lenders use this tactic because they don’t care about your actual ability to make the payments — they will simply foreclose on your house and benefit from the equity you’ve built up over the years.

If your income is outside of certain parameters, but the lender says “we can make that work,” you should already be on your guard. That’s red flag #1. If they try to persuade you that you can make payments that seem out of reach, you have another warning sign. You’re the only person who should be making decisions about your ability to pay back a loan!

2. The Helpful Contractor Scam

This scenario usually starts with a home improvement contractor (such as a roofer) who knocks on the door of homeowners to offer their services. Many of the homeowners will say, “Sorry, but that kind of project is not in our budget right now.” The contractor will counter this by saying he works with a lender who can help offset the cost. Long story short — the homeowner signs some papers that turn out to be a home equity loan.

This scam is not as common as it once was. But it still happens on a regular basis all across America, so it’s worth mentioning in our list. Unfortunately, as with many scams, the elderly are often the target with this approach.

The first thing you need to realize is that a reputable contractor will rarely practice door-to-door marketing. That’s the first red flag. Additionally, a contractor should never refer you to a third-party lender — it’s a conflict of interest. That’s the second red flag.

3. Loan “Stacking” or Flipping

I refer to this scam as “loan stacking,” because that’s what takes place. The more common term for it is “loan flipping.” Regardless of what you call it, the scenario goes like this. The lender will offer the homeowner a second equity loan after the homeowner has already received a first one (and made a few payments on it). Basically, the lender refinances the initial loan to grant the homeowner additional money.

In some cases, this will happen more than once. And with each new round of financing, the rates typically get higher and the fees larger. The borrower now has even more money to use for whatever prompted the first equity loan — but they also have a lot more debt spread out over a longer period of time. Homeowners who fall prey to this scam often get in over their heads with all the fees that stack up on them. It’s a good way to lose your home.

There Are Some Trustworthy Lenders

I don’t mean to scare you away from the equity loan as a source of financing. On the contrary, it can be a useful tool for a responsible borrower, and there are plenty of reputable lenders that will offer you fair terms and treatment. I’m simply trying to warn you about the common scams that go along with these types of loans.

My advice is to use a lender you’ve heard of before, a company who has been around for a long time and has a reputation at stake. Be a smart consumer when pursuing such a program. Do plenty of research and let common sense guide you.

Lisa

Jon Spears asked:




Every mortgage or refinance needs a target; something larger we’re trying to accomplish beyond just buying/refinancing a home or investment property. The best loan isn’t always the loan with the lowest rate, but the loan that helps you move forward financially.

Here are a few “Refinance Rules” you may want to consider.

These are rules aren’t strict-rather they are just like the sites on a rifle…they help everyone get a focus.

Because a mortgage should not be an end in and of itself, but a means to a bigger end.

Top Refinance Rules…

#1) Eliminating Consumer Debt: (Non-tax deductible)

#2) Have a Savings Cushion: Ideally 3-6 months in a liquid interest-bearing account.

After you close on a home loan, you’ll need a savings cushion. They focus so much on the mortgage rate, that they’ll empty all their savings to buy a home. Not a good idea! Tell me, does it matter if you get the lowest rates in Texas if you don’t have $500 left to your name after closing?

This is one reason why people should consider 95% loans. There’s a myth out there that most people with good credit put 20% down–but most the 80-90-95% home loan clients are PhDs, teachers, physicians, engineers, Aggies, OU Sooners, who could easily put 5-10% down. They choose to keep mortgage down payments to a minimum so they can put more money elsewhere, like money markets, buying investment homes, etc.

Refinance Rule #3) Pay of home before 30 years and save a ton in interest…..you shouldn’t pay for your house 3 times.

Go with the loan that moves you forward financially. If this is a 15 year refinance-great. But if you have debt and you’re paying lots of money out each month-your best bet is going with a home equity loan. The fewer bills you have the better.

Mortgage rates go up and go down…so chasing a magical rate is kinda stressful. And waiting for the market to come your way takes you out of control of your finances. I mean, if rates are 7% and you’re waiting on rates in the 4% range, you may be waiting a few years.

Have a strategy when going into the home loan or refinance- and “use” the mortgage to execute your game plan. Mortgages are just tools. And choosing the right tool is very important.

Ask yourself: “Is there a better way to approach a home loan or refinance than just trying to get some “magical low rate.” Naturally, rate is important, closing costs are too, but let’s try to blend two objectives. The more things you can accomplish with your refinance the better you will be and the better ROI you get from your closing costs.

For most people, they only aim at the mortgage rate. So what do mortgage companies do…they give low rates to these people. But With PMI…

PMI: Consider this, if your rate is 6.00% and the house payment is $1000. But your PMI is $200 month do you still think your rate is 6% if you’re paying $1200/month? Why don’t more people avoid PMI-it’s almost always a waste of money. You guessed it. Home loans that are 80/20 or 80/10 or 80/15s have higher rates because these are riskier than single loans.

And did you know mortgage people make more money on single loans vs. 80/20s or 80/15/5 loans?

Or take 95% home loans…these rates are higher than 20% down. But sometimes people want to keep their money vs putting it towards a home. Maybe they are self-employed and can get a greater return on this money elsewhere or maybe they can take the 5% down and eliminate all their consumer debt. Each person is different and has different goals and incomes.

So how do we actually blend these goals of low rates with financial planning? What do the “Refinance rules” look like in real life.

Someone calls and says “I want to lower my rate. I want to lower monthly bills.” Okay, great. That’s pretty general. Sorta like most high school boys want a nice car and a pretty girlfriend. Who doesn’t want this?

But what if we took at bigger approach to things and blended your goals for a refinance rule and added “eliminate consumer debt” to the equation. What loan would we choose if the objective was to reduce your family’s overall monthly expenses-not just the mortgage?

Just focusing on the mortgage is fine-who doesn’t want a lower home payment. But when we look at the mortgage in context of the overall family expenses we are really doing is improving your overall financial plan. This is what a financial planner truly needs to do. And all financial planning begins on the mortgage level. Because when you are out of debt you have more money to save, to invest, to build towards retirement.

And it all this begins on the mortgage level.

What’s your current refinance goal? Maybe your situation might be “Hey Mr. Mortgage guy, what loan do you suggest that will help me retire at age 55.”

Let’s talk about Home Equity Loans: We recently helped a client get out of debt with a home equity loan. They’ll save over $900/month. That’s $10,800 a year they have in their checking accounts. Not theoretical money. Not the What Would Dave Ramsey Do (WWDR) approach of “cancel your cable and take the difference and put it into a municipal bond so you can make 1.3% over 10 years” But real money.

Financial planning truly begins on the mortgage level.

Home Equity Loans: If you are going to refinance, at least look at something larger than the mortgage rate. For example, let’s say you’re current mortgage is 7% and rates are at 5.75%. You’d really like to refinance and lower your bills. Let’s say, if you took advantage of the 5.75% you’d save $100/month. Hey-that’s progress!

But what if you took some equity out of your home and paid most/all of your non-tax deductible debt off in the process? This probably would save you $500-$700 month. Then you could take some of the savings and apply it to your principal and pay a 30 year mortgage off in 15-20 years. That is a very important step-and here is where I agree with Dave Ramsey-you must have a budget because without this you’ll get back into debt.

Refinancing to get a low rate is good. The second approach moves you to an entirely different financial situation.

I mean, you’re going to have closing costs anyway. Why not go with a home loan that will move you forward financially vs. one that will just save you $100.

Some people think home equity loans are not good. Gurus like Dave Ramsey don’t encourage them. But if the numbers make sense-who’s to argue? Is Dave Ramsey going to pay your bills for you?

Dave teaches some great time-tested fundamental principles. Most of which I agree with. Budgeting, saving, low debt…but the more I listen to his show the more I see his main goal is this: ” Get to zero.”

“Don’t owe anyone anything”…which is good. He even throws some Bible verses around. Who could disagree with a simplistic message of getting to zero?

I don’t think you win the financial game by getting to zero. I believe you get there when you have money. When you have assets. And anyone who takes a black and white approach to anything, I tend to disagree with. Few things in life are 100%-and money is no different. If you called Dave’s show and said “Hey I make good money but I my retirement is iffy at best. I only have 30K in retirement and I’m 50 years old.” He’s likely to suggest you need to budget more, maybe cut out some vacations and buy another book of his.

If you called, me and you’d didn’t have any goals of your own-I’d probably suggest the things that Dave suggest- but I’d encourage you to buy investment properties or some other growth vehicle. If your IRA is growing at 1-2% and we find some properties that are growing at 3-5-7% I’d might even encourage you to put more of your savings towards a higher yield vehicle like established real estate. No specs stuff. Then, with the right planning and discipline, you could retire with several properties that have equity.

Then, with these assets you could sell them or keep them and enjoy passive income during your retirement years. Whichever approach you take-you’ll need to get some points on the board because “getting to zero” is no long term game plan. Most people need to take the Dave Ramsey PLUS perspective…. Take the budgeting, savings, getting out of debt time-tested fundamentals–PLUS buying and keeping assets and starting businesses, even if you have to incur debt.

Because getting to zero should not be the goal and every mortgage should have a specific purpose to move you forward financially.

Susan

Eshwarya Patel asked:




The process of purchasing a home is quite daunting. If you are a first-time home buyer, you should try to avoid this kind of a scenario. You can speed up the process and facilitate its progress by doing your homework.

Your research will help you to distinguish between the first-time buyer loans and the home equity loans. You can choose the one that is best suited to your personal needs.
Following are some basic facts about the home equity loans:

o In case of a home equity loan, you are required to pledge your property as collateral in order to obtain financing.

o If you have a bad credit history and are willing to borrow a significant amount of money, you can opt for a home equity loan.

o These loans are safer than the first-time buyer loans. They do not involve any risk and therefore, lenders offering such loans tend to be liberal. This is because the borrower can neither disappear with the house nor hide it in case of default.

Following are the advantages of home equity loans:

o Interest rates are lower than the first-time buyer loans.

o They can be easily obtained in case the borrower has a bad credit history.

o Relatively large loans can be availed.

o These loans are tax deductible.

Following are the disadvantages of these loans:

o In case of non-payment, the home can be forfeited.

o There is great possibility that the borrowers might lose their most valuable asset-their home-by getting into illegitimate deals with scammers.

Jonathan

Rebecca Oconnor asked:




According to a Federal Reserve Bank report published in 2002 thirty-five percent, the biggest share, of home equity loan dollars goes back into the borrowers house through home improvements and maintenance projects. Considering the benefits and the ease of leveraging the equity you already have through a second mortgage or mortgage refinancing, this is hardly a surprise. ”The cake itself is the equity, and that is the important part of ownership,” Richard Wakelin, of Wakelin Property Advisory. If you are smart about building equity you can earn it even faster and with less investment. Some of the best ways to increase equity are simple such as:

1. Buying a home in the right neighborhood is critical. If the real estate values are rising, you could build equity without doing anything more than holding on to the property.

2. Curb appeal is key to raising a home’s value. It doesn’t take much money to install irrigation and landscape a property, but the first impression from the outside can be worth a lot. If you have some equity in your property already, a home equity credit line may be a better way to fund these smaller improvements than using a credit card. The interest is lower and so are the payments.

3. Remodel the kitchen if you really want to increase the value. Buyers are willing to pay more for a home with a gorgeous cook-friendly kitchen. If you are looking to do a remodel, mortgage refinancing is a good way to cash out on the equity that you already have and invest in building further equity. (Likely with a tax break on the interest as well.)

4. Master bedroom and bathroom improvements are also a good way to increase equity and can also be paid for through a refinance.

5. Don’t forget small improvements with “sweat equity” either. Just a little bit of capital and a lot of muscle can greatly improve a home through painting, wall papering and other do-it-yourself upgrades.

A little bit thought and effort can go a long way in making your property your best investment!

Stacey

Paul Hockney asked:




Home equity loans are fixed rate home loans that allow you to tap into the money (equity) you’ve already invested in your home to finance debts or other purposes at a lower interest rate than most revolving credit options.

With house valuations increasing considerably over the last 10 years many UK homeowners are unaware of equity loans as a way of raising finance.

For example if you are a homeowner with a house valued at