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Do You REALLY Need a Home Equity Loan?
Your equity is the amount your home is worth, on the market,
minus the amount you owe to your mortgage broker. For example, if
your property is worth $200,000 and the balance you owe your
mortgage broker is $100,000, then your home equity - the part of
your property that you own free and clear - is $100,000.
A home equity loan is a loan that uses the equity in your home
as collateral. That means you are using your home as a guarantee
that you will repay the loan. Before you even consider borrowing
against your home equity, you need to understand that a home
equity loan reduces your home equity by the amount of the loan
and that if you do not repay the loan, you could lose your
house.
These loans have advantages and disadvantages compared with
other kinds of borrowing. You should consider the "Pluses" and
"Minuses" of borrowing against the equity in your property before
apply for a equity home loan.
Pluses
*The interest paid on a home equity loan is tax-deductible,
just like the interest on your mortgage. This of course is not
the case with credit card interest.
*Equity home loan rate may be lower than other kinds
borrowing, such as credit card debt, because you're using your
property to guarantee the loan will be repaid.
*A home equity loan gives you a source of funds for important
big purchases: a college education, home improvement, a medical
emergency, or other emegencies that may arise.
Minuses
*Your payments on your home loan must be met or you could lose
your home.
*Often you will have to pay closing costs, which can be
substantial, this is money which will not be recoverable and will
diminish your loan value.
Having excess equity in your home will make you a target of
unscrupulous sales tactics designed to get you to rush into an
expensive loan you may not need. If you feel like you're being
pressured to borrow, just say no - always take your time when you
take out a home equity loan.
There are reasons that make a home equity loan a good choice
but also reasons that are not good. You should consider them
wisely.
Good reasons to take out a home equity loan.
*Improving your finances - A home equity loan can consolidate
your debts, by paying off high-interest credit cards or other
high interest loans which are not tax deductible.
*Investing in your home - You can use a loan to increase the
value of your home by using it for needed home improvements or
repairs.
*Investing in your future - Home equity loans can help finance
an education or start a business.
Bad reasons to take out a home equity loan.
*Spending the money on luxury items - Don't risk your house to
buy that new car, big boat or take an expensive trip. You should
save until you can afford it.
*Using the money for living expenses - If you're spending more
than you're earning day after day, a loan will only delay the
"inevitable." Try to find ways to cut your expenses instead. A
credit counselor can help.
*Loan the money to a friend or relative - Remember, it's your
house that's on the line. Don't let a friend or relative pressure
you to take out a loan for them. If they don't pay you back, they
lose nothing - but you could lose your home.
If you're thinking about taking out a home equity loan as a
last resort to get out of serious financial trouble,
DON'T. Chances are, you'll just run up your debt again and
will soon be just as bad off as you are today, and possibly lose
your home as well. Get help instead! A credit counselor can help
you improve your finances at little or no cost to you.
This article may be freely distributed and reprinted as long
as the author's information and web link are included at the
bottom of the article. For more info
Copyright 2005. William McNutt. All rights reserved
About the Author
Bill McNutt is a freelance writer and web designer. Having
retired as an Aerospace Engineer after 30 years, he became
fascinated with web site design, retirement got boring. He now
writes articles about his website contents and adds to his
websites. For more info Click
Here
 MORE RESOURCES updated Thu. February / 09 / 2012
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New HARP Could Help Up to 6.7 MillionNASDAQOther changes to the program were designed to make it easier for homeowners with private mortgage insurance (PMI) to refinance or to obtain a HARP mortgage refinance with a lender other than their current mortgage servicer. In addition, new limits were ...and more » |
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A Guide to the Best
Remortgage Deals
Finding the best remortgage deals isn't always easy,
especially with the large variety of lenders available
today. It can sometimes take a lot of research and time to
locate the best remortgage deals for your home, though the
end result is often worth it.
Revive Mortgage Tenure
With Extend Loan Term Remortgage
You are comfortably wedged in a mortgage deal, paying the
standard rate of interests year after year. You are most in
all probability paying more than required and you don't
even know it.
Non-conforming Home
Loans vs. Conforming Loans
The simple definition of a "non-conforming home loan" is:
You have a job and can make the payments. Your credit is
used only to determine your interest rate and the loan
amount to value of the home ratio.
Sub-Prime Mortgage Loans
- Things You Should Know About Sub-Prime
Mortgages
Sub-prime mortgages are not that much different from
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fees.
Is the Inverse Mortgage
a Scam? New Program Promises Mortgage Payoff inside of 5
Years
If a mortgage could be paid off in five years or less,
without it costing homeowners an extra cent, why wouldn't
every homeowner in America be doing it? Because they don't
know, or because they're too wise? Although the former may
be the case for many, I certainly hope the latter is the
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Short-Term Interest
Rates on the Rise; Adjustable Rate Mortgage Holders Prepare
for Increase in Rate
Interest rates are on the rise and many home owners who
have adjustable rate mortgages may see increases in their
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Alan Greenspan made it clear in 2004 that the Federal
Reserve would be increasing short-term interest rates at a
"measured pace.
Poor Credit Home
Mortgage Loans - The Role of the FICO Score
If you have bad credit history and are looking to get a
home mortgage loan, then chances are you are going to need
to know all about how the FICO credit scoring system
works. FICO - Fair ISAAC & Company - is the leading
credit reporting agency that lenders turn to when it comes
time to credit scoring your home loan mortgage application;
so if you do have bad credit history, these guys will know.
Home Equity Loans -
There's Gold In That There House
To paraphrase an old familiar quote that goes "there's gold
in them there hills, you could say, there's gold in that
house. As Martha Stewart would say, "it's a good thing".
Adjustable Rate Mortgage
- How They Work?
How does an ARM work. The borrowers interest rate is
determined initially by the cost of money and the time the
loan is made.
Mortgage Loan Most
Bankers Wont Give May Be Exactly What You Need to Buy or
Refinance Your Home
A few years ago, a loan officer who worked for me was
having a problem helping a customer. He was new to the
business and had very little patience for problems (as you
might have already guessed, he didn't last very long).
Types Of Home Equity
Loans
There are two broad types of home equity loans: Term loans:
Home equity loans of a fixed nature are also called second
mortgages. For example, if you have bought a home for
$10,000, and made a down payment of $1,000, and taken a
mortgage for the rest and have managed to repay another
$2,000, then you can apply for a home equity loan of
$3,000.
High Risk Mortgage
Lenders - Using a Sub Prime Lender Online
Sub prime lenders handle high risk mortgage loans that
traditional lenders refuse to touch. Through slightly
higher interest rates, sub prime lenders protect themselves
from the higher rates of foreclosures.
Home Improvements Turn
Average Homes into Dreams Come True
If you're thinking about taking out a home improvement
loan, there are several options to consider. First and
foremost, your mortgage consultant needs to know why you
want a home improvement loan.
Home Loans -- The Hot
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In recent years, the mortgage industry has introduced
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When is the Right Time
to Refinance Your Mortgage?
You've heard that interest rates are down and you think it
could be time to refinance your existing mortgage, but the
entire loan application process was so exhausting during
the initial loan that you aren't sure it's worth the
hassle. You could very well be right, but there are some
things you can do to help decide whether it's time to
refinance your mortgage.
Avoiding
Foreclosure
If you fall behind in your mortgage payments, you face the
threat of foreclosure. Foreclosure means your lender can
take over your home, and you must move out.
VA Loans, A Gift from
Uncle Sam
Uncle Sam has a gift for the men and women who serve our
country. It is the VA loan.
Securing a US Commercial
Mortgage
What's the most efficient way to secure a US Commercial
Mortgage? Work with a mortgage broker who specializes in
this area. If you've ever applied for a loan, you're
familiar with the mountain of paperwork you are required to
complete during the process.
Home Mortgage Loan
Refinancing Online - 3 Tips on Refinancing Your
Home
When refinancing your home, it's helpful to know a few
things about refinancing. When you refinance, you usually
pay off the old loan and sign for a new loan, whether you
are refinancing your 1st mortgage, second mortgage or home
equity loan.
Mortgage Loans Explained
In Plain English
With the many different kinds of mortgage loans out there,
choosing the right one for your needs can be a difficult
task. The following points will help you understand the
pros and cons of the different types of mortgage loans
available to you.
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