Home Equity Loans – second mortgage

Brandon Baarz asked:




There are many advertisements out there regarding home equity credit loans. We are barraged with television ads, billboards, radio spots and direct mail- I received three last week. Many wonder if home equity credit loans are a good idea. There are some things to think about before making this decision.

You can make the necessary payments- as with any loan, financial discipline is very important. This is even more so because a home equity loan acts as a second mortgage. Essentially, you are using your home as collateral, making it vital to make necessary payments. Because the lender has your home to back the loan, this gives you the opportunity to borrow at a much more favorable interest rate. The most attractive aspect of a home equity loan is that you can consolidate higher interest credit lines or loans. This gives you the option to use the extra income for your everyday needs, or pay off debt much faster.

You are making a major purchase or home repairs- we often do not have the money to buy larger items, therefore they need to be financed. A loan using the equity in your home can give you the lowest finance charge, as well as more favorable or flexible terms. Home repairs are part of home ownership, and very few owners have adequate savings to take care of them. Home equity loans are a good way to pay for these expenses, as cheaply as possible.

Do not use a home equity credit loan to supplement day-to-day spending, or on frivolous purchases. If you look at a home equity loan as permanent debt, you will keep digging yourself further into debt, often to the point of bankruptcy. You don’t want to put your home at risk. Also, if you know a major purchase or home repairs are imminent, it is a good idea to save the loan for those purposes. Basically, be smart with the money you borrow. We can get trapped by the low interest rate and feel we will be paying it off quickly and easily. Home equity loans are good tools for financial stability, if you use it wisely!

Benjamin

Joel Gray asked:




If you are planning on buying your dream home, a second or vacation home, or even planning to relocate with a new home purchase, there are definitely a variety of home loan options to check out.

Many banks, financial institutions and private lenders offer home loans; home equity loans, private loans or equity line of credit loans. All good lending programs will consider this, as it helps you to borrow the money, just by using your home on collateral basis.

What is equity?

In financial jargon, it is said to be the difference between the cost of home and how much you owe on the mortgage or combined mortgages, in the case where you have a second mortgage out on the property. In other words the value of your home is the equity you have built into it.

Home Equity Loan Rates

You can find out what current home equity loan rates are, compare them with several different financial institutions and use handy online calculators at BankRate.com: http://bankrate.com . For example, as per the current statistics of the Bank of America, their home equity loan interest rates are as follows:

1. 30 year with a fixed rate is 5.81 percent on the amount taken as loan.

2. 15 year with a fixed rate is 5.51 percent on the amount taken as loan.

3. 30 year with a fixed jumbo is 6.12 percent on the amount taken as loan.

4. 15 year with a fixed jumbo is 5.78 percent on the amount taken as loan.

The monthly payment of a loan is calculated to be around $400 to $1000.

Home Improvement Loan

If you want to fix up your home, then you will want to search for information on a home improvement loan. These types of loans are designed for the people who want to finance their home repairs, renovation of their homes, room additions to their old homes, etc. without going for equity loans.

The benefits for this kind of loans are:

No or limited requirement of collateral.

Interest rates are competitive and are lower than line of credit loans.

Approval of loans is faster

Information of the loan and the transfer of the balance both are can be done through online banking.

Transfer of funds for the payment of loans can be done through online banking access.

Now that you have been shown the ins and outs of getting a home loan, what do you think that next thing you should do is?

So get a loan and get ready to move into your dream home today!

Ron

ketc9 asked:

From KETC’s Facing the Mortgage Crisis special on July 15, 2008: Is this a bad time to be taking out an equity line of credit? Yes, it is not a good idea to borrow against your house. There are various circumstances where you might want to get a small loan to do home repairs, but with the current economic situation, be cautious before doing so.

Catherine

Carrie Reeder asked:


Even with poor credit, your options for getting a home equity loan are numerous. Home equity loans are different from other types of personal loans. For starters, these loans are secured. Lenders prefer this factor because it’s easy for them to recoup their money if the loan defaults.

Understanding Home Equity Loan Options

When applying for a loan using your home’s equity as collateral, there are several options. Homeowners with poor credit may take advantage of a home equity line of credit. Similar to credit card cash advances, homeowners are approved for a line of credit up to a dollar amount not to exceed their home’s equity. Homeowners are free to withdraw funds as needed. The money can be used to payoff debts, repair an automobile, or make home improvements.

On the other hand, a home equity loan is disbursed as a lump sum of cash. Similarly, the funds may be used for large expenses or major home repairs. Both home equity options must be repaid. Home equity loans have fixed terms, whereas home equity lines of credit are available for a specific length of time.

Pros and Cons of Home Equity Loan Options

A home equity loan and line of credit are beneficial because they provide extra cash when you need it. Furthermore, if you have bad credit, maintaining regular payments will boost your credit score. If the funds are used to consolidate debt, homeowners can get on the road toward becoming debt free and boosting their credit score. In fact, many people obtain a home equity loan as a means of improving their credit rating.

The pitfall most common of home equity loans is the inability to repay the money. Sadly, some people cannot handle credit or money responsibly. Thus, once debts are consolidated or paid off, some people accumulate additional debts. The smart maneuver would be to close paid accounts, which would alleviate the temptation to use a credit card.

After incurring additional debts, some people are powerless to continue regular payments. If you acquire a home equity loan, there are multiple liens against your house. Consequently, either lender may foreclose. By defaulting on either loan, you risk losing your home.

Current Mortgage Lender vs. Sub Prime Lenders

When choosing a mortgage lender, do not rely on your current lender to offer the best rates. Getting a quote from your lender is ideal; however, you should also request quotes from new lenders. Banks or credit unions will not offer the lowest rates to persons with poor credit. Nevertheless, you can attain comparable loan rates by using a lender that specializes in bad credit loans. Sub prime lenders have convenient online applications and instant approvals. If using a mortgage broker, you will receive several sub prime loan offers within seconds.



ISRAEL

Albert Alexander asked:


Everyone wants to know the answer to the same question. So how much can I get? How much you can borrow is directly related to your equity which is simply estimated by subtracting the outstanding balance you owe on the home from the current market value. Equity simply refers to the cash value that has grown in your home while you have been making your monthly payments over time. Equity loans enable homeowners to borrow money against their home’s calculated value.

At the same time as home equity loans are a great approach to free up extra cash which is tied up in your home, borrowers must be fully aware that they are using their home as collateral. If a situation arises and their loan obligations aren’t met, they could lose their home. Historically, home equity loans were strictly used for home repairs that would increase the value of your home. Nonetheless, these loans have become a feasible selection for large, non-home improvement related purchases or even for consolidating outstanding debts into one monthly payment at an affordable interest rate.

These loans, secured by real estate, are generally considered safer by lenders. Because of this your interest rates are likely lower than credit card rates or consumer loans. In addition, regardless of the rate, the interest on debt secured by the mortgage or lien on your personal residence is commonly tax-deductible. Please consult your accountant for more detailed information.

Equity loans are great in that they use the collateral of your home to secure the loan, helping you to get a better rate out of the deal and make smaller payments than you would to a credit card or even on a personal loan. Home equity loans can be used for consolidating consumer debt or covering a large expense such as a wedding, college tuition, or home renovations to your existing home. Home equity loans are desirable to borrowers because they oftentimes have a lower interest rate, they are easier to qualify for even if you have bad credit and payments on a home equity loan may be tax deductible.

Even if most lenders feel comfortable with home equity lending, and may be more liberal because they view home equity loans as comparatively safe, it’s still a loan. Lenders consider many factors such as your credit history, ability to repay the loan, and your homes equity (noted above) when making a decision on how much money to lend. Home equity lending, often referred to as a second mortgage or borrowing against your existing home, can open up a lot of avenues as a funding source for a current homeowner.

Because they normally have a lower interest rate, are easier to qualify for (even with weak credit) and the interest may be tax deductible, home equity loans are a great alternative for individuals. Home equity loans are, when all’s said and done, fixed rate home loans that allow you to take advantage of the money you’ve already invested in your home to finance larger debts at a typically lower interest rate than most revolving credit choices.

Home equity loans are a great option if you are sure of your ability to pay them off. Like anything else however, buyer beware. Hidden fees and confusing rate calculations can make a bad situation get even worse. Less reputable lenders frequently target people in vulnerable circumstances with troubled credit by proposing what appears to be an easy way out.



SHELTON

Eddie Lamb asked:


When seeking to understand what an equity line of credit is, it is important to first understand what home equity is.

It is basically how much of your home you have actually owned. It is calculated by looking at the current market value of your house minus your outstanding mortgage balance.

If you have a house that has been appraised for $100,000 and you own 50,000 on your mortgage, you have $50,000 in equity. If you no longer owe anything on your mortgage and your mortgage is paid off, then you have 100% equity in your home.

So what is a equity loan?

This is a loan that is borrowed against what you already own in your home. Though just because you own 50% equity, it doesn’t mean that you’ll be given that much. Your debt, income and credit history will also be evaluated. These loans offer tax savings due, because the interest paid on the loan is tax-deductible. They’re often used to consolidate debt, to finance college educations, large vacations, home repairs or even a second home. The most common option is to make regular payments toward both the interest and the principal. Many of us are looking for the best company that offers great deal in terms of mortgage loan.

There are two basic types of equity loans.

Traditional, AKA a second mortgage, gives borrowers a lump sum of money that must be repaid over a designated period of time.

The second type is an equity line of credit. This provides borrowers with a credit card or checkbook to use to borrow funds. With this, if you have $20,000 in equity you can use the credit card or write checks up to that $20,000 amount. It’s kind of like a secured credit card. The benefits of this type of loan are that you don’t begin accruing interest until you make a purchase with your line of credit.

Most home equity lines of credit are only available for a certain time period, 10 years for example. There will also be limitations on how you use your credit. Some plans may require you to borrow a minimum amount each time you borrow and they may require you to keep a minimum amount outstanding. some lenders refer to a second mortgage as a loan used for purposes of adding value to your home.Some plans may also require that you take an initial advance when the line is set up.



SCOTTIE

justin narin asked:


What is Home Equity?

 

Purchasing a home is a huge life event. It’s an investment that, over time, could yield a significant increase in value. As the years progress, the value of your home could increase. If and when the time comes to sell, hopefully you’ll find that you can get more money for your home than what you originally paid for it; yielding you a profit.

 

But the resale value, or even the appraised value before a sale, of your home is not the only value your home contains. When you purchase a home and make payments on your home mortgage, you start building what is called home equity. Home equity is the difference between the current value of a home and the amount still owed on the mortgage. As the principal of the mortgage amount decreases as a result of monthly mortgage payments, the home equity increases – even if the home doesn’t increase in value. So, you can build home equity from an increase in the potential sale price of a home and from paying down the mortgage debt that you owe on your home.

 

What is the Value of Home Equity?

 

Home equity is money in the bank. Homeowners can borrow against their home’s equity to pay for home repairs and renovations, school tuition, costly medical expenses, and even pay off debt. Your home provides you with financial opportunities not many lenders can provide. Home equity is a significant advantage to purchasing a home and a great financial resource to have. You never know what life will throw at you. It’s always good to have a “nest egg” of readily available built up capital to turn to if you’re faced with a financial crisis.

 

How do I use My Home Equity?

 

If you want to use your home’s equity for home repairs, college tuition, etc. , you first need to get a home equity loan. A home equity loan is a loan based on your home equity. There are two types of home equity loans:

 

1) A second mortgage (a.k.a. traditional home equity loan); and

 

2) A home equity line of credit loan.

 

A second mortgage is a loan where the lender lends you a lump sum, based on your home’s equity, and interest starts accumulating once the loan is issued. A home equity line of credit loan, however, is a loan where the lender presents you with a credit card or checkbook that you can use to make purchases. Just like a second mortgage, the amount you can spend is based on your home’s equity. But unlike a second mortgage, interest on a home equity line of credit loan doesn’t start accumulating until you make your first purchase with the card/checkbook.

 

Both home equity loan types are feasible means to utilizing your home’s equity.

 

Which type of loan you choose is up to you and your specific financial needs. Both loan types are primarily low interest loans and, for most home equity loans, the interest you pay is tax deductible.

 

However, it is important to know that when you take out a home equity loan, it means the lender can reposes your home if you default on your payments. In other words, if you don’t pay your home equity loan in full or default on too many payments, the bank or lender can take away your home and use its current value to pay for what’s owed. So it’s crucial that you maintain your loan payments. A home equity loan is a great financial resource, but if you don’t pay it back, it could end up costing you your home.

 

Purchasing a home is a venture worth taking. The appreciation of your home’s value and the equity you can build make your home a profitable investment that can’t easily be matched.

For more articles and suggestions, visit http://www.bills.com/home-equity-basics-article/

 



HUNTER

Joel Gray asked:


If you are planning on buying your dream home, a second or vacation home, or even planning to relocate with a new home purchase, there are definitely a variety of home loan options to check out.

Many banks, financial institutions and private lenders offer home loans; home equity loans, private loans or equity line of credit loans. All good lending programs will consider this, as it helps you to borrow the money, just by using your home on collateral basis.

What is equity?

In financial jargon, it is said to be the difference between the cost of home and how much you owe on the mortgage or combined mortgages, in the case where you have a second mortgage out on the property. In other words the value of your home is the equity you have built into it.

Home Equity Loan Rates

You can find out what current home equity loan rates are, compare them with several different financial institutions and use handy online calculators at BankRate.com: http://bankrate.com . For example, as per the current statistics of the Bank of America, their home equity loan interest rates are as follows:

1. 30 year with a fixed rate is 5.81 percent on the amount taken as loan.

2. 15 year with a fixed rate is 5.51 percent on the amount taken as loan.

3. 30 year with a fixed jumbo is 6.12 percent on the amount taken as loan.

4. 15 year with a fixed jumbo is 5.78 percent on the amount taken as loan.

The monthly payment of a loan is calculated to be around $400 to $1000.

Home Improvement Loan

If you want to fix up your home, then you will want to search for information on a home improvement loan. These types of loans are designed for the people who want to finance their home repairs, renovation of their homes, room additions to their old homes, etc. without going for equity loans.

The benefits for this kind of loans are:

No or limited requirement of collateral.

Interest rates are competitive and are lower than line of credit loans.

Approval of loans is faster

Information of the loan and the transfer of the balance both are can be done through online banking.

Transfer of funds for the payment of loans can be done through online banking access.

Now that you have been shown the ins and outs of getting a home loan, what do you think that next thing you should do is?

So get a loan and get ready to move into your dream home today!



ROOSEVELT

Carrie Reeder asked:


Refinancing your home equity loan can help you save cash through lower rates or lower payments. To get the most out of your home equity, use your second mortgage as part of your overall financial plan. That may mean consolidating debt, paying for home repairs, or investing in a college education.

Getting The Most Out Of A Home Equity Loan

Home equity loans offer low rate credit, lower than almost any other type of financing. Your home’s equity is also your investment, and ideally should increase in value over time.

When you choose to borrow against your home’s value, make sure that you are getting the most out of the deal. Trading in high interest credit card debt for a low interest second mortgage financially makes sense. So does increasing your property’s value through home repairs and upgrades.

Make sure that you also take advantage of any tax benefits that your home equity loan qualifies for. In most cases, paid interest can be deducted on your IRS return.

Refinancing For Increased Savings

Refinancing your home equity loan can further increase your savings through reduce rates. Most home equity loans have adjustable rates, which are susceptible to rate increases. Refinancing your loan can help you lock in lower rates and select better terms with fewer annual fees.

You can also reduce your interest rates and payments by picking a shorter loan period. Choosing to pay your loan every two weeks can also save you hundreds.

Another option is to combine both your first and second mortgage through a refi. Merging the two loans into one saves you money on both application fees and interest rates.

Strategies To Find Refinancing

To get the best deal on your refinancing, take some time to research loan offers. You can get loan quotes online without hurting your credit score. By providing lending companies with some basic information, you get numbers that you can base your refi decisions on.

Take a look at a number of available loan terms. For example, compare the savings of refinancing both of your home loans and just your home equity loan. You can also adjust the payment period and rate terms. With this added information, you can be sure you are getting every advantage from your home’s value.



SYLVESTER

justin narin asked:


The reasons to consider a second mortgage are as varied as the programs available to you once you make the decision to tap into your home equity. Some popular reasons include college tuition, bill consolidation, health expenses, and home repairs. When it comes to borrowing money, these types of loans are favored for a number of

reasons, not the least of which is the tax deductibility of all the interest paid on an equity loan. Before you start shopping around, however, you should decide whether you want a closed-end second mortgage or a home equity line of credit (HELOC).

A closed-end second, also known as a home equity loan, refers to a second mortgage that is structured in a very similar way to your first. To borrow using a home equity loan, or closed-end second, you make a one-time choice on the amount you would like to borrow, close on the loan, and receive a check for the amount you’ve chosen. You will have regular payments structured over a period of years, and upon completion of those payments, your home equity loan will be paid in full. If you decide later that you would like to draw additional funds, you will need to arrange for an additional loan with additional closing costs. However, the closed-end second carries a fixed rate that will never go up and offers a straightforward plan for paying the money back.

A HELOC, on the other hand, is a line of credit from which you can withdraw money again and again. In many ways, a HELOC is just like a credit card, but the interest you pay is tax-deductible. You will close on a HELOC only one time, but if you decide after a few months that you need to withdraw additional money, you will be able to do so up to the value of the loan. That is to say, if you close on a HELOC for $60,000 and over a period of time pay back $13,000 toward the principal, that $13,000 is available to be drawn again at any time. You will continue to make payments toward what you owe just as you would on a closed-end second; however, the full amount of the loan is always available to be drawn on, as long as the amount you owe and the amount you borrow do not exceed the total amount of the original HELOC.

Whether a closed-end second mortgage or a HELOC is right for you is something you, your loan officer, and / or your financial planner must decide. If you are relatively sure that you will need to borrow against your equity only one time in the next several years, a closed-end second offers the fixed rate and regular amortized payment schedule that ensures you know both how much your payment will be and how long it will take you to pay off the loan. This kind of assurance can be particularly useful if you don’t trust yourself to spend wisely, or if you tend to buy impulsively and don’t want the option of drawing out additional funds.

A HELOC can be most useful if you are taking on a project, such as home repair, that has the potential of unforeseen expenses. A HELOC offers you the flexibility to borrow again and again. You may even be able to secure a HELOC that carries a low interest-only payment allowing you to borrow more and still have a manageable payment amount each month. Whichever you choose, drawing against the equity in your home is sure to save you money on the interest you’re paying for your purchase power, and as always, the interest you pay on any type of home mortgage is tax-deductible, offering an additional incentive.

Consult your loan officer or financial planner to decide whether a closed-end second mortgage or a HELOC would best suit your needs. Once you’ve made this first decision, you’ll be well on your way to finding the right equity loan for you.

For more articles on Home Equity Line of Credit, visit: http://www.bills.com/home-equity-line/



GAIL