Monday, March 5, 2007

Home Equity Loan And Line Of Credit

Home Equity Loan And Line Of Credit by Patricia Lewis


Many people turn to a home equity loan to consolidate their debt, pay off some credit cards, make repairs, renovations to their current home, pay for personal vacations, weddings, or other special purchases.

A home equity loan is a one-time loan amount that is paid off over a period of time with fixed interest rates. Borrowers cannot get this loan amount extended, and will lock in the current rate. There is also what is called a home equity line of credit. A home equity line of credit is extended to borrowers with a home equity loan and can be used like a credit card. Any amount can be withdrawn and paid off as part of the principal balance. Both types of loans are available for home owners who qualify for the loan terms.

Equity is the difference between the worth of the home, and how much is left on the mortgage. The line of credit simply turns this amount into cash, and can be used for other projects or as a revolving credit card balance.

Many people look for a home equity loan when they are looking to make a big purchase. This might include refurnishing or renovating the house, purchasing a new car, or obtaining a personal loan. A home equity loan lets the borrower borrow money against the home's equity as collateral for the loan. If the borrower does not repay the loan, they can lose the home or if they sell the home, the loan still remains and requires repayment.

There are many home equity scams and frauds in the market, offering very low interest rates but exceptionally high fees. These are often disguised as balloon payments, or sudden appearances of new larger loans just from a recent loan. This is called loan flipping, and can only drive you into a circle of debt. Some contractors may offer a home improvement loan that they states you've already been pre-approved by a bank. No matter what the case may be, it's important to review all documentation, rates, and obtain a second opinion by shopping around.

Getting a good deal on a home equity loan is similar to obtaining the original loan. The borrower will need to provide steady credit, and possibly offer an up front payment to reduce the rate and term of the loan. Getting a good deal on the equity loan may also involve obtaining a good appraisal of the house--the collateral--and working with an ethical and legitimate lender.

About the Author

Chat with Patricia. Visit http://www.mortgagebrokertip.com for up-to-date tips, FAQ's and news. Patricia Lewis writes informational items on the latest news in the mortgage arena.

Sunday, February 11, 2007

10 Things You Need To Know Before Getting A Refinance Or Home Equity Loan

10 Things You Need To Know Before Getting A Refinance Or Home Equity Loan by CL Haehl


Refinance loans and home equity loans both give you an opportunity to get cash when you close on the loan. While both options can be a great way to save money and get money, there are certain things you should know before getting a refinance or home equity loan:

You Need a Good Reason to Get a Loan

It doesn't matter if you are considering a refinance loan or home equity loan; you need to have a good reason for spending the money it will take to close on the loan. Good reasons may include the need for a better rate and terms or the need for cash to consolidate debt or pay other outstanding bills. Whatever it is, make sure the loan will save you money in the long run, and more importantly, make sure you can afford the new loan payments.

Refinance Terms Vary

Not every refinance loan is the same. Some have lower payments during the term and one final balloon payment at the end. Some terms last 30 years, while others only last 15. If you will be getting a refinance loan, make sure the terms will be manageable for you.

Home Equity Loan Terms Vary

Like refinance loan terms, home equity loan terms can also vary. Some loans are adjustable rate options, while others are fixed. Term lengths can also fall all over the map, so it is a good idea to evaluate all of the options available to you before making any final decisions.

Introductory Rates Can Be Misleading

Sometimes known as "teaser rates", introductory rates look good on paper, but can be very misleading. Before being drawn into a loan with introductory rates, you should have a clear understanding of when the rate will adjust, what the rate cap is, and what your payment might be at its highest.

Fees Need to Be Compared

When most people are looking for a refinance or a home equity loan, they compare interest rates. While this is a smart thing to do, interest rates aren't the only thing that should be focused on in the comparison process. Because lending fees and closing costs can vary from lender to lender, you also want to take time to make comparisons between these variables.

Loan Interest Isn't Always Tax Deductible

Contrary to popular belief, the interest paid on a home equity loan or a refinance loan isn't always tax deductible. Before automatically assuming that you will be able to get tax savings, you should speak with a qualified accountant. An accounting professional will be able to look over your situation, as well as the potential loan to determine whether or not you are eligible for tax deductions.

There is No Such Thing as a Free Loan

Don't be fooled by lenders who offer no closing cost refinance loans or home equity loans. There is no such thing as a free loan. If you don't pay the costs upfront, you will pay for them later on in the loan. While this may not seem so bad, you need to remember that you will also be paying interest on anything not paid upfront.

Negative Amortization Loans are Risky

Though they are not as popular as they once were, negative amortization loans are still offered by lenders. These loans present a great risk to the borrower because loan payments aren't always enough to cover the required interest payments. Any unpaid interest will be added to the unpaid principal, making it very difficult to pay the loan off in a timely manner.

Tax Assessment Aren't Genuine Appraisals

If you are thinking about getting a refinance loan or home equity loan, don't assume that the local tax assessor's appraisal represents the actual market value of your home. Tax assessments aren't genuine appraisals. Your home may be worth quite a bit more or quite a bit less than the amount indicated on your tax assessment. The only way to find out how much your home is really worth is to contact an independent real estate appraiser.

You Can Back Out

Federal law gives you the opportunity to back out of a refinance loan, a home equity loan, or any other type of loan that will be using your home and property as collateral. You have a total of three days to change your mind after the loan has closed. If you are unsure about the loan for any reason, this window of opportunity is your chance to get out before it is too late.

About the Author

See 50 Things You Should Know Before Refinancing Your Home or Applying for a Home Equity Loan.

Wednesday, February 7, 2007

The Home Equity Loans Pros and Cons

The Home Equity Loans Pros and Cons by Joann Cheong


Should you tap on home equity for much needed funds? Read on this loans pros and cons and learn out why and why not.

Usual case scenario: You are riddled with debt, credit card bills, tuition fees, household repairs. The only thing you eyeing is the home equity loan plans. Bungalow equity loans can be disastrous to the wrong hands, in your case a wrong series of decisions.

A bungalow equity loan is a good escape hatch indeed to a debt riddled situation but in a responsible hand. After all where can you find the biggest asset that can be liquidated to a loan readily than your house? Sounds terrifying yes, but proper payment and interest plan that coincides with a regular income or a major expected windfall around the corner like stocks can purely avert disaster.

So what are really the house equity loans pros and cons? The definite number of pros is equated evenly with its cons. But it is more favorable to be aware of all the cons before venturing what apartment equity loans can do for you.

The most dreadful circumstance is losing your homes. And losing your home this way is the most dreadful if not embarrassing. Your insurance won't be triggered this way and some apartment equity loan plans include all the furnishings on the time of the survey.

Facts about foreclosure are real. They happen. In fact high foreclosure rates happen on Georgia, Nevada and Colorado. One out of every 422 households is in primary stages of foreclosure in Georgia, 1,795 properties entering foreclosure in Nevada, 3,747 properties in Colorado. This is because of apartment equity plans gone awry. The most common culprit are Lost jobs.

It easy to spend for everything you need when you have money; or rather when an accessible means is readily available. It could happen in a fixed rate apartment equity plan, but most victims are line of credit type apartment equity plans. Why? When you have a ready check available, you tend to dispense it faster than you could count your receipts. The outcome is endless piles of bills, coupled with your mortgage, plus your house equity charges. So you draw more amounts from the house equity loan to offset your existing bills, digging yourself deeper into debt.

In the house equity loans pros and cons, I like to point out that the cons should be highlighted always. Learn about the cons before committing something as valuable as your property. If you have mastered the art of cautious spending, the house equity option will be your best friend yet.

About the Author

Read More At Home Equity Loans Pros and Cons.Or visit richforest.

Tuesday, February 6, 2007

Dangers Of Home Equity Loans

Dangers Of Home Equity Loans by Patricia Lewis


A home equity loan is very attractive to home owners since it can help increase immediate cash on hand, provide a way to fund repairs or renovations of the home, and offer an extended line of credit. A fixed rate equity loan can reduce monthly payments, and an extended line of credit can help pay down high-interest credit cards or personal debt. Still, there are some dangers of home equity loans.

Some lenders and brokers can promise a lower interest rate or lower monthly payment, but the payment can go up if the borrower's credit score decreases. Homeowners who are not able to meet the demands of the change can put their house at risk of repossession if they cannot repay the debt in time. Consolidating debts or refinancing a home in this way is not a good idea if the borrower ends up instead with a larger loan that they cannot pay off easily.

Even when money is saved on the home equity loan or line of credit itself, some borrowers may end up overspending in other areas. If credit cards are paid off, they may start buying things on credit again and end up making monthly payments beyond what is affordable. Plus what happens when the funding estimated for a project the loan was obtained for - house repairs, college expenses, unforeseen medical emergencies - exceeds the initial funding amount? Borrowers may find themselves spending more money than they sought to save.

Some mortgage companies might charge excessive fees that the homeowners don't know about until they sign the final papers. This is becoming increasingly common, and it's important to know all of the terms and final costs well before hand. Other poor lender practices include equity stripping, loan flipping, and over borrowing. Equity stripping is when a lender will inflate the income on an application to secure the loan. This results in the borrower not being able to pay back the amount. Loan flipping is when a lender increases the loan amount by increasing the current mortgage. This results in an overextended amount that the borrower cannot pay. Over borrowing involves extending a loan for more than the house is worth. This borrower cannot receive a tax deduction on this amount and may not be able to keep up with the payments.

Although there are many advantages of a home equity loan, there are some dangers and pitfalls to look out for. Sensible budgeting and financial practices are important to stay ahead of payments, no matter how small or large the amount may be.

About the Author

Chat with Patricia. Visit http://www.mortgagebrokertip.com for up-to-date tips, FAQ's and news. Patricia Lewis writes informational items on the latest news in the mortgage arena.

Know The Basics Of Home Equity Loan

Know The Basics Of Home Equity Loan by Amanda Thompson


Do you want to get a fabulous opportunity that your home gives you? If yes, you should have an insight on home equity loan. Featured with different distinct facilities, this loan helps you during your financial urgency. It gives you a chance to opt for a good amount of money under the equity of your home.

First of all, let us have a basic understanding regarding the word equity. Actually, the word equity implies the current market value of a home minus the outstanding mortgage balance amount of money. Suppose the market value of your home is £200,000 and you owe £70,000 on your mortgage, then you will easily have £130,000 equity available on your home. Now, with the help of this equity, you can easily apply for a good amount of loan.

A home equity loanis marked for its distinct features and facilities. Here, you can raise a large amount of loan up to £100000. At the same time, you get the facility to repay the loaned amount up to maximum of 25 years, which is definitely a comfortable duration. However, you should always be aware of the fact that in home equity loan, the amount of sanctioned money primarily depends upon the equity of your home. To avail a home equity loan, you need to do a proper research. And for this, you can take the help of online method. Through this method, you can reach out to a large number of lenders, who provide attractive loan quotes regarding home equity loan. Just choose the lender, who will meet all your requirements. This loan is again open for both good and bad credit holders. All borrowers are welcome in home equity loan. So, grab it when you need money and be benefited.

About the Author

Amanda Thompson holds a Bachelor's degree in Commerce from CPIT and has completed her master's in Business Administration from IGNOU. She is working as financial consultant for Chanceforloans. To find home equity loan, personal loans, tenant loans, wedding loans, bad credit personal loans UK, mortgage at cheap rates that best suits your needs visit http://www.chanceforloans.co.uk

Tuesday, January 30, 2007

Earn Residual Income from Home Equity

Earn Residual Income from Home Equity by Sherman Choo


Many people take advantage from the equity earned from their home ownership to borrow money for vacations, remodeling or major purchases. Others have found they can use that equity to help build residual income.

The home equity is calculated based on the difference in what the home is worth and how much is owed to pay off the mortgage. Typically, a lender will allow a homeowner to borrow up to 80 percent of the equity in the home, while a few will go higher.

While borrowing money to invest is not usually advised, since a sudden swing in the market in which you invest could leave you holding the second mortgage with no return to show, planning to enter the market on a long-term investment may provide you with some residual income from your home's value.

For example, if you are able to borrow on the equity of your house at an annual percentage rate of five percent and can invest with a guaranteed return of seven percent, the rate you earn will generate more income than the cost of the capital invested. However, keep in mind that market fluctuations may result in a lowered return as the risk of investment rises.

You are still going to pay the first and second mortgages at the rate upon which you agreed to with the lender. Your investment, if in stocks, could take a nose-dive and is why it is not recommended. However, having an opportunity to purchase stocks at a vastly reduced rate, such as exercising the purchase of previously acquire options, with no hold limits on the stock, it may prove a good move to build residual income.

Theoretically, if you have options to buy stock at 50 percent of their current value, and no hold restrictions attached to exercising those options, receiving a short-term low-interest loan to purchase them and immediately selling them at the current rate to pay off the loan could realize a decent gain, once the cost of the loan is deducted.

The profit from the sale can then be placed in a more conservative investment in order to build residual income for the future. In this scenario, borrowing to build residual income from your home equity may be a sensible move.

For those looking for a more lucrative return on their investment may choose a riskier opportunity, as long as they realize that the higher the desired residual income, the higher the risk involved and that ratio has to be factored in to the potential return.

Everything associated with building residual income has a certain degree of risk to be factored in, as well as the cost of each transaction made. However, if all those risks and costs are factored in to the formula, investments can reasonably be expected to help generate residual income.

About the Author

Sherman Choo is a creator of "Internet Membership Income" systems, the best type of money to make online

Home Equity Loans: Showing The Advantage Of Equity

Home Equity Loans: Showing The Advantage Of Equity by Peter Taylor


So, do you want to avail a loan to meet your financial needs? Do you want to get the loan with better terms and conditions? Do you possess a home? If yes, then you can avail loan against your home equity. With home equity loans, a homeowner can take the advantage of his home in order to avail a loan.

Before we start our discussion about home equity loans, first we need to understand what home equity is. Usually, equity of a home is judged by deducting the outstanding mortgage with the present market value of the home.

Home equity loans, however, are a sort of secured loans. In this option, borrowers' home equity plays the role of security. With these loans, a borrower can borrow the amount, ranging from £5000-£75000. These loans are mainly offered for 5-25 years.

Since, these loans are secured on borrowers' home equity and the presence of security covers the risk of lending amount; hence, lenders do not hesitate to offer these loans at a better interest rate. Besides, if you want to get a pocket friendly deal, you need to make some efforts. Various lenders like, banks, financial institutions, lending companies offer home equity loans. Meet all those lenders personally, collect their loan quotes and compare them minutely. It will enable you in getting home equity loans at an attractive interest rate. In such cases, online option could be the best choice. With this option, borrowers can get a better deal within a limited span of time and without taking much initiative.

At the same time, it is recommended to borrowers to avail the amount that can suit their economical condition. Remember, these loans are secured on your home equity, so if you cannot repay the amount, your home will be repossessed by lenders. Therefore, borrow the amount that is repayable for you.

About the Author

Peter Taylor is a senior financial analyst at Best Tenant Loans UK with an acumen for finance and insurance. In recent years he has taken up to provide independant financial advice through his informative articles. To find Home equity loans,Bad credit tenant loans,Unsecured tenant loans,UK best tenant loans,Secured tenant loans UK that best suits your need visit http://www.besttenantloansuk.co.uk