Home Equity Loans – second mortgage

Carrie Reeder asked:




A home equity loan makes it possible for homeowners to gain access to their home’s equity without selling the property. Traditionally, homeowners would have to sell their primary residence in order to access the equity. The money could be used as down payment on a new residence, or used to payoff debts. Fortunately, moving is no longer the only option for tapping into one’s equity.

How is Home Equity Gained?

A home’s equity is the difference between the mortgage amount owed and the market value of a property. Homes and properties gain equity in one of two ways. For starters, as homeowners submit mortgage payments, the overall balance on their mortgage loan is reduced. Secondly, homes acquire equity as a result of rising home values. Within the past two to three years, many housing markets across the nation have witnessed phenomenal housing increases. For this matter, many homeowners have acquired unbelievable equity amounts in a short period.

Purpose of Home Equity Loans

Each homeowner’s reason for acquiring a home equity loan will vary. Common reasons include using the money to eliminate high interest debts. Many people set a goal of becoming debt free. However, due to high finance fees on credit cards, reducing the balance is extremely difficult. In most cases, a lump sum of money is required. Home equity loans provide the required cash.

Additionally, home equity loans are perfect for upgrading or making improvements to a real estate property. Other reasons may include building a cash reserve, starting a business, or paying for a child’s education expense.

Interest Rates on a Home Equity Loan

The most appealing feature of home equity loans are the low rates. Granted, the rate paid on an equity loan will be slightly higher than a first mortgage. Nevertheless, the interest rate is dramatically less than those for credit cards and other loans. Furthermore, home equity loans have short, fixed terms. If using the loan to consolidate debts, homeowners receive an estimated payoff time for their debts. On average, home equity loans can be repaid in as little as three to seven years. Here is a list of recommended Home Equity Lender online. It’s important to use a reputable lender online to make sure your personal information is secure.

Elizabeth

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

Bill Stone asked:




There are several ways to obtain low cost home equity loans. One way is to look for a no closing cost home equity loan. With a no closing cost home equity loan, you pay no upfront fees. By reading the fine print, you can find out whether a particular loan you are interested in has the closing costs included in the loan.

Another option is to request, from the start that you do not wish to pay closing costs. Online lenders typically have a box that you may check for no closing costs. Often, there are also comment lines to leave a note about what exactly you are looking for. With low cost home equity loans that have no closing costs, interest rates are usually 1 point or more higher than other equity loans.

If you are looking to spread out your payments on low cost home equity loans, you can also look for a low interest rate home equity loan. With a low interest rate home equity loan, you will save money in the long term, as opposed to right up front. This type of loan would typically save you the most money on loans lasting longer than a couple of years.

By calculating the short and long term costs of each type of loan, you can better decide which low cost home equity loans are right for your budget. Many online lenders have equity loan calculators on their websites, which can assist with calculating the short and long term costs of different home equity loans.

Finding Low Cost Loans

Finding low cost home equity loans can be done on your computer or in person. There are many online lenders who specialize in home equity loans. You can start by running a search in most tool bars for what you are specifically looking for. Because you are able to submit all your information online, online lenders can verify all of your information electronically. This can yield you decisions faster, often in just minutes.

Taking advantage of pre-qualification forms online can also help you narrow down your search to only those lenders who can help your situation. Due to the major increase in online competition, you may also get lower quotes, which can save you money in the short or long term.

Other options for finding low cost home equity loans are in person, at local mortgage companies, banks or credit unions. Your personal mortgage broker can often get you lower rates, comparable to those of your existing mortgage. By using your home as collateral, you can often negotiate lower rates as well.

Banks and credit unions can sometimes get you lower rates, too. If you have accounts in good standing, you can often apply for low cost home equity loans through your own bank or credit union. This can also be an option for those with less than perfect credit trying to obtain home equity loans. Accounts in good standing with banks and credit unions can often be used as a good credit reference, in those instances.

Katie

Akia24544 asked:

Rule #1: Banks WANT to Give you Money In fact they’re desperate to give it to you. Every bank in the world makes their money by making loans and charging interest. But bank’s are also faced with a dilemma. If they give loans to everyone, then that money becomes less valuable. In fact, it…

Catherine

Carrie Reeder asked:


Getting approved for a personal loan with recent or past credit problems may pose a problem. Because of credit blemishes, most lenders are hesitant to offer money to those with a low credit rating. Thus, acquiring funds for large expenses or emergencies is impossible. On the other hand, if you own a house, you may qualify for a home equity loan with poor credit.

What are Home Equity Loans?

Home equity loans are funds secured by your home?s equity. Because the cash is collateral-based, it is easier to qualify for these types of loans. Thus, individuals with poor and good credit may obtain a lump sum of money within a few days.

If applying for a home equity loan, you can receive funds up to the amount of your home?s equity. Therefore, if you owe $50,000 on the home loan, and your home?s assessment is $120,000, the equity would total $70,000. If acquiring a home equity loan, you may get approved for up to $70,000.

Why Get a Home Equity Loan?

Homeowners acquire home equity loans for assorted reasons. Debt consolidation is a motive for getting a home equity loan. Through debt consolidation, homeowners are able to shrink or reduce their debts. Use the money to payoff credit cards, consumer loans, auto loans, student loans, etc. Furthermore, home equity loans are ideal for making home improvements, taking a vacation, or paying for a child?s college tuition.

Home equity loans will create a second mortgage. Because home equity loan balances are smaller and the terms shorter, the monthly payments are less than first mortgages. Moreover, home equity loan balances are paid within ten to fifteen years.

Home Equity Loan Basics

For the most part, home equity loans have fixed rates. Thus, your monthly payments will remain the same for the period of the loan. If you have bad credit, these loans are the easiest to qualify for. Nonetheless, bad credit applicants should do everything possible to get the lowest rate.

When shopping for home equity loans, it is important to compare rates. Contact a variety of money sources. Completing online applications with mortgage brokers will provide you with multiple offers within minutes. Furthermore, you should manage your credit score. Review your credit report and check for inaccuracies. If possible, attempt to boost your score before applying for loan.



HARLAN

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

Stefan Hyross asked:


A home equity can be a great way to to get some money fast. Home equity loans are also sometimes called second mortgage. They allow a homeowner to borrow money from the equity they have in their home. Home equity loans can be for as much as $100,000 allowing homeowner to borrow to do renovations, pay off debt, etc. The interest on a home equity loans is tax deductible which has made this type of loan quite popular in the 1990s. Let’s look at how they work. Home equity loans come in two types. There are fixed rate home equity loans and line of credit home equity loans. In both cases, the terms vary from five to fifteen years. However, in both cases, the loans must be repaid in full in the event that the house is sold. The fixed rate home equity loans option gives the home owner a lump sum payment from the equity. The home owner will then repay the loans over a pre-determined period of time at a fixed interest rate. In most cases, the repayment is made monthly and the interest rate and the monthly payments remain the same over the life of the loan. In the case of the line of credit home equity loan, the principle is much the same as with a credit card. In fact, this type of loan often comes with a credit card. The home owner will be notified of the maximum limit of the line of credit and he or she can spend the money either by using the credit card or the cheques that the lender provided. Just like credit cards, line of credit home equity loans work on a variable rate of interest, which is determined monthly. Repayment of the loan must be made monthly, based on the amount borrowed that month. Once the life of the line of credit is over, the outstanding balance must be repaid in full. Home equity loans are a great source of money for home owner that need access to cash quickly. The money can used for anything at all but most borrowers will use the money to do home improvements, send kids to college, pay off another loan, etc. Home equity loans can be very appealing as their interest rate are almost always lower than other types of loans and certainly lower than credit cards. Someone with a credit card loan would benefit from taking a home equity loan on their home in order to repay the credit card debt. Not only will the home owner reduce his interest rate, the loans will be consolidated into one month bill and the interest rate on the home equity loan is partially tax deductible. Home equity loans are a great financial tool. Particularly for home owners looking to do renovations or with unforeseen expenses. They provide fairly easy access to money at a relatively low interest rate. However, remember that the loan must be repaid and that if you sell your home, the amount that you borrowed will not be profit in your pocket.



MARTIN

James Copper asked:


A home equity loan is a popular and attractive source of borrowing for thousands of people. Part of the reason people think first of a home equity loan when they need a substantial sum of money is that home equity loans are marketed extensively, with advertisement in every medium.

Lenders love home loans because they are highly risk free. Therefore, a home equity loan is easy to get and offers one of the best interest rate of any type of high end loan.

A equity loan is attractive for consumers, not only because of the low interest rate but because that interest can be deducted from income taxes. The outlook isnt completely rosy for consumers who are considering a home equity loan, however.

With any home equity loan you can borrow only up to 80 percent of the equity youve accrued in your home at the time of your loan application. If, for example, your homes current market value were 150,000 and the balance on your mortgage was 70,000 you could borrow 80 percent of the 80,000 equity, or 64,000.

Consumers should not make the decision to take out a home equity loan lightly. Nor should they borrow to the maximum 80 percent just because they can. Borrow only what you have to have.

Not only will this save you money in the long run but a loan officer who sees you being foolish about your willingness to put yourself in debt and your home at risk may think twice about your having the responsibility to pay back your mortgage – and on time.

Sometimes a home equity loan is used foolishly for a vacation or toys such as boats and other things that the consumer could really do without. The borrower assumes that their home will appreciate in value over the term of the loan so it really isnt like borrowing or paying interest, is it?

What if the home doesnt appreciate? What if the local mill or factory or other major employer closes down and the town loses a big chunk of property taxes and people move it and then the retail shops lose money and so forth and so forth. If you dont live in the Mid-Atlantic States or the rust belt talk to people who did or do. Hear what they have to say about the likelihood of this occurring.

No matter where you live downsizings, mergers, company closures, layoffs and buyouts are commonplace. There is just no way to predict that your home will appreciate, your job will be secure and youll be financially better off at the end of the loan and throughout the life of the loan.

A home equity loan, while often a wise thing, and a necessary action, shouldnt be taken on for frivolous desires.

There are occasions, such as lowered home mortgage interest rates and to get out from under high interest unsecured loans such as credit card debt when a home equity loan can save you money and improve your credit standing. When this opportunity arises, assuming you have the equity and can afford the payments, a home equity loan can be a very wise decision.



EVAN