Posted in Mortgage on 10/05/2009 02:56 am by admin
justin narin asked:
Learn the difference between a home equity loan and a home equity line of credit. This introduction also explains the best uses for these loans and your legal rights if you change your mind.
Description
The term “second mortgage loan” is not frequently used by lenders anymore. The traditional second mortgage is now more commonly called a home equity loan. A home equity line of credit is also referred to as a second mortgage. Both loans are backed by the equity in your home, but there are differences between them.
Home Equity Loan
The home equity loan is similar to the traditional second mortgage your parents may have had. Equity is the difference between the current market value and the principal balance of the mortgage loan. A home equity loan uses that difference as collateral for a second loan against your home. It doesn’t replace a first mortgage. Because it will be the second debt paid if you default on your loans, it has a higher interest rate than a comparable first mortgage. Most home equity loans have a fixed rate, although some are offered as adjustable rate mortgages. With a home equity loan second mortgage, you receive a lump-sum payment in cash and then repay the loan over a fixed period of time.
Home Equity Line of Credit
A home equity line of credit (HELOC) also uses the equity in your home as collateral. Rather than a fixed sum of money, your lender issues you a credit line with a fixed limit. You access the money by writing checks or using a debit card linked to it. HELOCs have a variable interest rate that is based on the current prime rate plus a percentage. You may borrow funds any time between the issuance of the credit limit and its expiration date, which can be anywhere from three to ten years. Your repayment terms and amounts vary depending on the amount borrowed and current interest rate. Most HELOCs require you to remove an initial sum and not repay it until the line of credit expires. Most also require a minimum withdrawal each time you access the funds.
How to Use a Second Mortgage
Regardless of which type of second mortgage loan you choose, second mortgages should only used to:
Make home repairs
Remodel your home
Pay education expenses for you or your child
Reduce other debts
In other words, a second mortgage should be used to improve your child’s or your financial future. It should not be used for non-real estate investments or purchases of consumer goods like televisions, cars, boats, or other big-ticket items.
Second Mortgage Right of Rescission
You have three business days, not including Saturdays, Sundays, and legal holidays, from the date you sign your home equity loan documents to cancel the loan without cost to you. The loan must be against your primary residence. If you used the same lender as your original loan, then you only qualify for rescission if you increased the amount of your original loan with a cash-out refinance or took out a home equity loan. You can rescind any mortgage refinance or home equity loan within the three day period if you used a different lender.
For more articles and suggestions, visit http://www.Bills.com
GRAHAM
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Tags: Adjustable Rate Mortgages, Current Interest Rate, Current Market Value, Current Prime Rate, Equity Line Of Credit, Heloc, Home Equity Line Of Credit, Home Equity Loan, Home Equity Loans, Initial Sum, Lump Sum Payment, Mortgage Loans, Repayment Terms, Second Mortgage, Sum Of Money
Posted in Loans on 06/04/2009 04:10 pm by admin
Johan Jeuring asked:
Home is a place where an individual lives in. By living in, the individual becomes emotionally attached to it vis-à-vis home is. Not only emotional and social assistance a home provides to its households, but also it gives its financial help too in the name of its home equity. The lending authority has come up with the provisions of secured home equity loans.
When individuals obtain Secured Home Equity Loans, they are borrowing money by using equity in their homes as collateral. Equity is the difference between the appraised value of property and the amount individuals owe on their mortgage. A secured home equity loans are also known as second mortgage, and provides individuals with a fixed amount of money, repayable over a fixed period of time. A second mortgage can be a great alternative to unsecured loans.
For instance, the interest rate on a secured home equity loans is usually lower than the rates on revolving or instalment debt such as credit cards or car loans. Another major advantage is amount individuals avail on secured home equity loans of £100, 000; this amount can be further increased up to £400, 000.
Interest rates on secured home equity loans are typically fixed, although there are variable rate program available online and offline. The term on these types of loans can vary from 5 to 25 years. The lenders qualify individuals by looking at their liabilities, assets, and creditworthiness, as well as appraising their homes.
There are galaxies of sites available online and likewise the lenders for secured home equity loans. Select some of them from, and go through their policies and plans of theirs secured home equity loans. Compare their loan quotes together, and make secured home equity loans plan accordingly. In order to get benefit from borrowers’ financial malaise, many fraudulent lenders have invaded the money market. So, individuals are advised to beware of such lenders, and make your secured home equity loans deals pragmatically and cautiously.
CYRIL
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Tags: Amount Of Money, Borrowers, Borrowing Money, Car Loans, Creditworthiness, Financial Help, Galaxies, Lenders, Liabilities, Loans Mortgage, Money Market, Mortgage Loans, Social Assistance, Using Equity, Variable Rate
Posted in Loans on 05/16/2009 07:56 pm by admin
Melissa Kellett asked:
If you have a mortgage loan and you have requested a home equity loan too, you can refinance both loans and get a single loan and a single monthly payment with the same or better terms than the average of both outstanding loans. This can be achieved by applying for a refinance mortgage loan.
Home equity loans, also known as second mortgages, are secured with the same asset as the primary mortgage loan, thus, when refinancing the home loan, you can include your home equity loan. This can provide you with many benefits like getting fewer monthly payments, saving thousands of dollars on interests, getting lower installments and reducing your overall debt exposure.
Refinancing: Concept
As you probably know already, refinancing consists on acquiring a mortgage loan in order to repay an outstanding mortgage. This can be done because the loan contract specifies that the money will be used to cancel the outstanding loan so the new loan will be the primary beneficiary of the security.
The home equity loan is, in this case, also replaced with the new loan and the new loan amount will be determined by adding up the previous mortgage loan amount and the home equity loan amount.
Saving Money? Getting Ease?
By refinancing you can save thousands of dollars on interests. Home equity loans generally come with higher interest rates than mortgage loans and thus, by obtaining a lower rate refinance home loan you will not only be saving money on your mortgage loan but you will also be saving even more money on your home equity loan.
Also, by refinancing you will unify both loans and get a longer repayment program and lower monthly payments. The resulting loan installments will be undoubtedly lower than the combination of mortgage loan payments and the home equity loan payments. Thus, even if you are indebted for a longer period of time you will get a lot of ease on your financial situation and income.
Refinancing Other Debt: Cash-Out Refinance Loans
A cash out refinance loan is a refinance loan with a higher amount than the outstanding mortgage loan and in this particular case than that of the mortgage loan and home equity loan combined. Once both loans are cancelled, the surplus can be used for any purpose you may think of, including reducing your overall debt.
If you have other debt like credit card balances, personal unsecured loans, pay day loans, student loans, car loans or any other loan, you can use this surplus to cancel your debt and thus, you will be saving money due to the lower interest rate that refinance mortgage loans feature.
This will improve your overall credit situation raising your credit rank and improving your credit history. Your debt to income ratio will also be improved just as your debt exposure. Using a cash-out refinance loan in this way is a smart thing and will do a lot to enhance your whole financial situation. Your ability to get finance will also increase since on your credit report, only a single outstanding and affordable loan will show.
RODRIGO
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Tags: Cash Loans, Financial Situation, Home Equity Loan, Home Equity Loans, Installments, Lower Monthly Payments, Money Mortgage, Mortgage Loans, Mortgage Refinancing, Period Of Time, Refinance Loans, Refinance Mortgage, Saving Money, Second Mortgages, Thousands Of Dollars
