Posts Tagged ‘Lump Sum’

What Are Home Equity Loans and Should I Get One?

Posted in Finance on 02/26/2011 10:31 am by admin
Nicholas W Partridge asked:




Home equity loans are a type of loan in which the borrower uses their own home’s equity as collateral. These loans are very useful for financing big expenses, such as education, medical bills or repairs to your home. It creates what is called a lien against the borrowers home, and therefore reduces the actual equity of the home.

Most home equity loans require a very good to excellent credit history and a reasonable loan-to-value ratio. In some areas, these loans are referred to as second mortgages.

Many people get confused between these loans and the home equity line of credit, the difference being that a line of credit can be drawn upon for funds at any time and often comes with an adjustable interest rate, whereas a house equity loan is a one time fixed lump-sum, usually with a fixed interest rate.

As for whether or not this type of loan is suitable for you really depends on your circumstances. If you have a lot of equity built up in your home and you’d like to release some of it, then using your equity is probably a good option. Just be aware that banks view these loans as slightly more risky than other types of loans, and will therefore charge a higher interest rate. It’s generally advised to use the funds for major necessities only, as opposed to things like holidays or boats.

Conclusion

Home Equity Loans are great for those of us who have nearly paid off their homes and are looking for quick funds to renovate the home, pay off some medical bills or other larger expenses.

Antonio
 

Home Equity Loans – Generate Funds Against Your Home

Posted in Finance on 01/27/2011 11:58 am by admin
Johns Tiel asked:




Equity is the worth of your home after reducing all outstanding expenses and mortgages to be paid. This equity can be placed as security at the time of financial needs to raise funds. In your financial substantial financial requirements home equity loans can be a way out of troubles. You can easily rely on these loans and grab financial help on time.

One can even advance home equity loans for paying off home loans. These loans can be taken up for other purposes as well. You can easily meet diverse financial needs such as:-

Carry home improvement
Buy a car
Pay off outstanding debts
Educational purpose
Go for holidays

Home equity loans are secured in nature. The amount of loan is also calculated by deducting all the outstanding. The loan amount varies from

 

125% Home Equity Loans – Are These Loans Beneficial or Risky?

Posted in Finance on 01/04/2011 05:48 pm by admin
Carrie Reeder asked:




Home equity loans are beneficial for numerous reasons. If you own a
home, and need extra cash, obtaining a home equity loan will put cash in
your pocket. The money received can be used for any purpose. Because
home equity loans are dispersed as a lump sum, homeowners usually apply
for these loans to pay for a huge expense.

No-Equity Home Equity Loan Basics

For the most part, the amount received for a home equity loan is
according to your home’s equity. Lenders are reluctant to approve homeowner
for loans that exceed the equity value. However, you may find a lender
willing to offer a no-equity home loan. Also referred to as 125% home
equity loans, these loans are both secured and unsecured. Lenders that
offer these loans will grant you a home equity loan up to 25% more than
your home’s value.

Why Get a No-Equity Home Loan?

125% home equity loans were extremely popular in the 1990′s. In more
recent years, the amount of people applying for these loans has dwindled.
Those who apply for these sorts of loans generally require a large sum
of money, and do not have sufficient equity in their homes. However,
because of rising home values, few people are taking advantage of
no-equity home equity loans.

Dangers of No-Equity Home Equity Loans

While obtaining more than your home’s value may appear to be a solution
to extreme money woes, no equity home loans are very dangerous. Today,
the housing market is strong. Most cities throughout the country show a
22% increase in home values annually.

However, if the housing market was to slow down, and home values began
to fall, those who obtain a 125% home equity loan would likely be
unable to sell their homes. For example, if your first and 125% second
mortgage amounts to $200,000, and you can only sell your home for $150,000,
you are responsible for paying the lender the addition $50,000.

Furthermore, some homeowners are unable to afford the extra monthly
payment of a high second mortgage. If you default on a home equity loan
for three consecutive months, the lender may foreclose. While these loans
are ideal for paying off bills and debt consolidation, some homeowners
fail to close paid off accounts, which results in acquiring more credit
card debt after the accounts are paid.

Dennis
 

Home Equity Loans Vs Home Equity Line of Credit

Posted in Finance on 11/06/2010 02:58 pm by admin
Aekkapol Kongvicheinwat asked:




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.

Elaine
 

Home Equity Loan – Learn How to Get a Loan, No Employment Verification FHA

Posted in Finance on 08/06/2010 01:29 pm by admin
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
 

Home Equity Loans – Finance Through Your Home

Posted in Finance on 06/30/2010 01:52 am by admin
Dina Wilson asked:




There are many ways of getting loans. Some require you to pledge a valuable asset as collateral. This type of loans will not only grant you a large amount of money, but also charge comparatively low rate of interest. Your home equity is one of the assets that can be put up against these loans.

The equity of your home is its monetary value remaining after deducting any mortgage or claim upon it. For instance, if the real value of your home is

 

How Does a Home Equity Loan Work?

Posted in Finance on 06/29/2010 12:37 am by admin
Maria Mbura asked:




It’s very simple. Home equity loan is a loan that you take from a financial institution and the money is borrowed using your house as collateral. Your home is the security against which the money is lent to you. The equity will be the difference between the market value of the house minus any outstanding debt, mortgage or loans against the property. That is the amount that can be borrowed. It is for this reason these loans are commonly referred to as second mortgages.

The amount borrowed can be charged a fixed or variable rate of interest. One of the benefits of home equity loan is the interest you pay is tax deductible at the end of the year when you file your tax returns.

Home equity loan is often used for purposes like debt consolidation purposes whereby you pay off high interest rates personal loans like credit card debt, medical debt, or education loans. It is also popular for home improvement financing.

There may be a number of ways of availing this kind of a loan. But the net result is always productive as you get a lump sum which attracts a fixed interest rate with fixed monthly repayments. The low monthly payments and affordable interest rates make it very popular.

Home Equity Loans are absolutely attractive mortgage agreements and because of their capability not only to operate as a safety net, they have seen an increase with many homeowners taking up these loans.

Finally it is wise to remember that your home is the collateral which means, in case you are unable to pay the loan you stand to have the house sold by the lender. So it is important to make your repayments constant and timely.

If you are looking for home improvement financing then understanding how a home equity loan works is crucial in helping you decide if this is the type of loan you should get.

Michael
 

How Does A Home Equity Loan Work?

Posted in Finance on 06/20/2010 08:31 am by admin
Sean Bailey asked:




You may know that a home equity loan is the possible answer if you urgently need cash. But are you aware too that this type of loan carries with it the danger of losing your home? Since your home is used as collateral, non-repayment of the home equity loan could mean foreclosure of your home. It is therefore necessary to have a deeper understanding on how does a home equity loan work. As mentioned before, if you take this type of loan you will use your home as collateral. What then is home equity? Let’s say you have purchased a house several years ago for a specified amount. Over the years you have made changes…you may have renovated the house; you may have added a wing or two. These changes have increased the market value of the house. The value that goes with the house is the home equity. Now, if you take out a home equity loan, you are in effect “using” your own money. It becomes a loan because it entails interest rates to be charged, monthly repayments to be paid in a specified period of time.

Basically, this type of loan would have a fixed loan term, a fixed interest rate as well as a fixed monthly payment. However, there is another type of home equity loan that has variable interest rates, monthly payments and terms – the home equity line of credit. Unlike the former type of home loan where the loan proceed is given in one lump sum amount, home equity line of credit can be withdrawn by the borrower as the need arises. Monthly payment varies as it would depend on the amount of money withdrawn.

One advantage of taking a home equity loan is the relatively low interest rates. The borrower is afforded savings opportunities because payment for this loan is tax deductible and interest rates can be written off from the taxes he/she has to pay. These type of loans are taken for a variety of reasons. The proceeds may be used to pay off credit cards with high rates of interests; it can also be used to infuse capital on a business.

If you have a good credit history and you have all the necessary documents, your loan will be approved in no time. The cash you urgently need will be in your hands but there is an important consideration you need to remember, your home ownership is at stake here. Non-payment of the loan could mean foreclosure of your home. As you can see, it is not as straight forward as you would like to think it is. I hope the article has given you some insights on how does a home equity loan work.

Bradley
 

When to Consider a Home Equity Loan

Posted in Finance on 06/04/2010 11:08 pm by admin
Jon Arnold asked:




What is a home equity loan? A home equity loan is where you borrow money using the equity in your home as the collateral. Many people use home equity loans for refinancing their home, their kids’ college tuition or unexpected medical bills. Be aware that using a home equity loan will reduce the actual equity of your home.

Your home equity is the value of your property. Your home value will increase as you pay your mortgage or do home improvements that benefit the value of your home.

Collateral is property that you use as a guarantee that you will repay the money. If you do not pay this is where your collateral comes into play. The lender can use your collateral to obtain the money you owe. Using your home as collateral is risky if you do not know one hundred percent that you can pay the loan back because you will lose your home if not.

A home equity loan is like a second mortgage some might say. You can use this money to improve your home furthering its value or pay for other expenses you might have. In order to get this type of loan you will probably have to have great credit history. It is even possible to have your loan interest deducted from your income taxes.

There are two types of home equity loans; closed and open end. Closed end loans means you will receive one lump sum when the loan is closed and will not have the option of borrowing more. The lenders will base the amount you can borrow on things like your credit history, the appraised value of your collateral and your income.

Closed end loans usually have rates that are fixed for up to fifteen years. You can also refinance this type of loan if needed. You want to try and always pay the minimum amount if not more every month.

Open end home equity loans are sometimes called a line of credit. This means you can decide when you want to borrow and how often against the equity of your property. The lender will still set a limit to your credit line. You might be able to borrow up to one hundred percent of the value of your home, however some states are only allowed to loan up to eighty percent of the value.

There are certain loan fees you should be aware of that may apply as well, depending on the laws in your state. These include title fees, stamp duties, closing fees, appraisal fees, originator fees, and surveyor fees.

While you may have to pay all these fees, if you do your research before obtaining this type of loan, you will know if it is worth it. You don’t want to chance losing money or value on your home.

If you are uncertain if a home equity loan is right for you, speak to your financial consultant. Discuss all your concerns and questions so you can both decide what is best for your situation.

Darryl
 

The Terms of Home Equity

Posted in Loans on 03/28/2010 05:18 pm by admin
Greg Smith asked:


Home equity is the value that your home has due to the payments that you have made on your mortgage. A home equity loan will enable you to borrow money using the equity that your home has as the collateral. It can be confusing to deal with all these terms but the reality of the situation is that you have to arm yourself with the knowledge of these terms. It is important to learn the definitions and understand what they mean when you are thinking of sourcing a home equity loan.

One of the first terms is collateral. This is the property or asset that is put as the guarantee that you will repay your debt. If this debt is not repaid then the lender is able to take the asset and use it to attain their money. With home equity loans the asset on the line is your home and you can be forced to move out of the home and lose the home if you default on the loan. The equity simply of your home is calculated simply as the difference between the worth of the home and the amount you owe on the mortgage.

You can use a home equity loan, which is a second mortgage to turn equity into cash, and this money is made available to spend on many items such as debt consolidation, home improvements, college or any other expense that you may have. There are in reality two main types of home equity debt. These are known as home equity loans which we mentioned previously and home equity lines of credit. These are often confused but they are not identical even though they are both secured by your property.

The typical home equity loan or line of credit is repaid in shorter times than mortgages. They are set up to run 15 years rather than 30 years but can be significantly shorter or longer depending. A home equity loan is a lump sum that is paid off over a set period. This is at a fixed interest and steady installment per month. This is one time and you cannot borrow again. The home equity line of credit operates a lot differently. There is a revolving balance that lets you borrow a certain amount for the duration of the loan or other set time limit. You withdraw as you need and pay off the principal and reuse.

There are various benefits and disadvantages of these two but this really depends on your unique situation. While there is more flexibility with the home equity line of credit there can also be some downsides due to the fluctuating interest. The home equity loan also has its disadvantages as it is possible to pay only interest and not principal and remain in debt. Whichever you opt for you must be aware of all the possibilities and how to avoid the downfalls. This can help you use either to your advantage and assist in keeping you away from the possibility of losing your home.



OTTO
 
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