Home Equity Loans – second mortgage

Gertrude J Fellows asked:




Credit equity home loan refinance is a refinance loan that you can have by giving the lender equity in your property or sometimes in your business as well. Loan refinance works in a similar manner to the equity loan, where you will be entitled to get a loan to the value of the collateral that you provide.

Refinance works in a very simple manner. You could pickup one of these loans to repay or refinance any other loan Usually you would want to refinance another loan or mortgage that you have taken with a loan that has a lower rate of interest.

It might seem that these loans are given out with out to much worry and that they are simple to get, the answer to that is a big no. There are a number of considerations to take into account before lenders would consider, before accepting an application for a Loan.

One of these considerations is the percentage of equity that is available to the lender and if this percentage is not enough then it is good by refinancing.

Another consideration is the income and credit rating or credit history, now as you must know the more healthy your credit history the more chances you will have in your home loan refinancing.

There are two types of refinancing available one is with a fixed rate of interest and a variable rate of interest.
The application procedure for the loan refinance is obviously a bit lengthy, as you would have to submit quite a few papers.

However, today banks try and keep the procedure short and simple. You could also apply online for a refinancing loans.

Maria

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

rsc asked:


I have about $60,000 in my cash accounts (banking and savings). Some of this money is in a savings account that I would consider my emergency funds. I have a very generous retirement program of about 12% of my salary, which has been established for about the last 6 years. I am 33 years old, with a wife that has a job and a generous retirement plan and 1 baby.

I have some other small mutual funds that I started from savings which are 3-10 years old and have a current value of approximately 12,000 dollars.

I have a mortgage. We purchased it for $579,000, and we put down 10%. The first loan was a 7 year arm at a rate of 6.5%, and the second loan was a home equity line of credit for $ 57,900. The second loan is a variable rate, pegged to the prime rate. When I first started that loan, it was at 8.5 %, but it is now as low as 4.2 percent. This, of course, changes with the prime rate. The first loan I pay on principle, and the current debt service is $ 448,000. The second loan is interest only, and still has a principle balance of $57,900. The down turn in the housing market has left me with only about 2-4% equity in my home as the latest appraisal was only $520,000

My only other debt is a car loan which has a balance of 15,000 and a rate of 5.25%.

What should I do with this extra cash?

Do I:
1. Pay down that line of credit? (obviously this has a variable rate that can change, and is currently taking up 100% of my line of credit which impacts my credit score)
2. Buy a second property? There are some good deals out there for a second home (i.e. condo in Florida) or a rental property. This would be an investment property since we can get something very cheap, but the downside is managing the property.
3. Put it in an invest vehicle? A mutual fund, bonds, etc.
4. Leave it in my savings account?
5. Or something else?

How much of that cash should I keep in my account versus investing or paying of my debt?

SHELDON

Dina Wilson asked:


When you obtain a home equity loan, you are borrowing money by using equity in your home as collateral. Equity is the difference between the appraised value of your property and the amount you owe on your mortgage. Home equity loans online, also known as a second mortgage, provides you with a fixed amount of money, repayable over a fixed period of time.

A benefit of home equity loans online of credit is that the approval process is less stringent than other loans. However, a lender will still look at your creditworthiness and the market value of your home. A home equity loan of credit often allows for a higher percentage of the appraised value to determine the maximum amount of the credit. Also, closing costs are usually lower than a home equity loan. In fact, there is so much competition that many lenders offer home equity of credit with no closing costs. Beware that these loans may have a higher initial interest rate, so compare the APR carefully.

Interest rates on home equity loans online are typically fixed, although there are variable rate programs available. The term on these types of loans can vary in between 5-25 years. The process of borrowing for these loans works similarly to a first mortgage. The lender will have to qualify you by looking at your liabilities, assets, and creditworthiness, as well as appraising your home.

Now, you find a straight answer of all your financial queries in home equity loans online. To qualify for this loan, borrower is supposed to bid any of his assets as a guarantee of the loan amount. In this way, the borrower shares the risk factor with the lender and gets lower interest rates in return. The whole concept of collateral signifies that the lender can realise his loan amount with that of assets of the borrower, if the repayment is not made in time.



MITCHEL

xena asked:


My first mortgage is 210,000 with fixed rate of 7.125% and my second mortgage is 52,000 with variable rate. When I called my lender, they will combine the two mortgage for me with fixed rate of 8.3%. I got 100% financing when I got my home and we only lived here for 1 1/2 year so we haven’t really build equity. I only checked with my lender and so far their the only one that would refinance my mortgage. I heard most of the bank will not offer this. Is it worth it for me to do this? Any advise wil be appreciated.

CAREY

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

Dina Wilson asked:


If you are a homeowner and looking for larger loaned amount at cheaper rates then your home can play a vital role of collateral; as it acts as much resourceful for availing best features of home equity loans.

Home equity loans allow the borrower to consider their heavy weigh expenses in easy and smooth way. Home equity loans support whenever borrower is in need of money. The term home equity means that borrower uses equity in his home as collateral. Simplifying the meaning of equity, it can be said that it is the difference between the market value of borrower’s home after deduction of the debts which are taken on behalf of borrower’s home.

So, Home Equity Loans are secured loans which lower the risk for lender and in respect to that lender offers better terms. Homeowner who is availing home equity loan enjoys interest rate at lower rate and repayment terms with flexibility.

The loaned amount is depended upon the market value of equity; so homeowner must get his equity evaluated from various dealers. The interest rates charged on home equity loans are typically fixed, but borrower can to benefit from variable rate program that are available in the financial market. The term period for home equity loans can vary from 5 to 25 years.

Meeting wedding expenses, major home improvements, consolidating larger amount debts, funding higher education, buying of luxury car, long listed medical bills etc are the most important purchases that borrower can considered for home equity loans.

The home equity loans are secured in nature and lender feels less risky so, borrowers with bad credit history like CCJ’s and IVA, defaults, arrears and bankruptcy can also apply for home equity loans. Borrowers with bad credit too avails easy conditions with the difference in the interest rate i.e. they are offered at slightly higher interest rate.

Borrower can access home equity loans from conventional modes like banks, financial institutions or leading lenders besides that today online mode is ruling the financial market. If the borrower opts for online mode then he can avail ample choice as online mode is flooded away with the online lenders that are ready to offer home equity loans at competitive rates.



CARLO

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