Posts Tagged ‘Home Equity’

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Tips On How To Get A Home Equity Loan

Tuesday, December 8th, 2009

There comes a time in many people’s life when we crave for more financial stability and wealth, but a limited fund prevents us from securing what we so earnestly desire. But if you are lucky enough to own a home already, this asset can provide you the means for furthering your dreams through the home equity loan.

You might have heard of people taking out home equity loans for various reasons such as for making home improvements or paying for medical bills or children’s college fees. These types of loans are also widely used for the purposes of debt consolidation.

Your home is the most valuable asset out of all that you possess. You can borrow money against your home on the basis of the value or equity of your house. But what does the term Home Equity actually refer to? In the United States, residential properties are most commonly bought through a mortgage. The mortgage amount can be paid over quite a long stretch of time. After you clear the entire mortgage amount, the property belongs to you. In the meantime, your property builds up a value of ownership; this value is the “equity” of the homeowner. This equity is worked out on the basis of the current market value of your property. The value of equity is calculated by subtracting the outstanding mortgage balance from the current market value of the home. You are eligible to get a home equity loan against this equity value of your home. One thing to remember though is that while your the equity of your home cannot be sold, the financial institutions do not mind lending you money against it.

You have to opt from two main types of loans, namely the traditional home equity loan, popularly known as second mortgage, and the home equity line of credit.

The traditional home equity loan will enable you to borrow a lump sum of money that is to be repaid over a fixed period. On the other hand, the home equity line of credit provides the borrower with a checkbook or a credit card which can be used to borrow cash against the equity of the home.

It is important to make an informed decision before you choose a financial institution from which to take out this loan. It is often not the case that the institution that granted you the first mortgage will offer you the best deal the second time around. So shop around on the internet and choose a bank only after making a thorough comparison.

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Benefits of Home Equity Loans

Sunday, December 6th, 2009

Home Equity Loan in terms of common man is, by using an individuals home he can borrow money. In this case the property is used as a collateral guarantee for the money received. It has been understood that the individual has to repay the debt within a time frame, and if he fails to do so the money lender can sell the collateral and take his money back. So, in this case the equity in the home is used as collateral. If the debt has not been paid the concerned party will be forced to lose his home. If the loan amount has been paid, in full then the property will be the buyers. Equity can be explained as the difference between the worth of the home and how much loan exists on the mortgage and the banks will lend money against the equity only. This type of loan is taken for the purpose of major home repairs or improvements, education expenses, wedding expenses, medical expenses etc.

Home Equity loan can be classified into two different types as, Traditional Home Equity Loan and Home Equity Line of Credit and these are also known as second mortgages, as they are safe by the security of property. These types of loans are returned in a short span of time than the first mortgage.

Traditional Home Equity Loan is also known as closed end home equity loan which means the money borrowed must be returned or repaid within a predetermined period. In this type, the interest will start to accumulate immediately after the money has been given. And at the time of closing a lump amount of money can be borrowed and will not be able to get further amount. The loan amount will be determined by analyzing the credit history, income and value of the collateral. For this type of loan they have a specific period say up to fifteen years.

Home Equity line of credit will offer the borrower a cheque book or a credit card which can be made used to borrow money against the home equity when and how often the concerned party requires the amount. Until a purchase is made against the equity the interest will not begin to accumulate. This type is also known as open end home equity loan. The period fixed generally to repay the loan is over thirty years at a varied interest rate.

Generally home equity loans have some specific fees and some of them are Evaluation fees, Inventor fees, Stamp Duties, Concluding fees, Arrangement fees, early pay-off, Surveyor or Conveyor or valuation. In some cases, some of them may be ignored. This can be increased or decreased if the concerned party has his personal surveyor to examine the property. The fees differ from loan to loan so that the parties concerned must have a clear picture in the beginning itself. This type of loan helps in tax savings because the interest paid against the home equity loan is tax-deductible.

The web guide http://www.fundsleader.info discusses the key features of mortgage and refinancing in a comprehensive manner. Also check out http://www.financialdeals.info for a better understanding of how refinancing works for various types of loans.
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Home Equity Loans Versus Home Equity Lines of Credit

Monday, November 16th, 2009

There is a difference between these two ways of obtaining credit. As great as the differences are, the uses are also radically opposite. The only thing in common is the equity that your home represents as collateral to the credit you get and the way you spend it. If you own a home, a line of credit might be just what you are looking for.

A Necessary Definition

Home Equity is the amount or portion of the value of your home that is not affected by a mortgage. If you have one granted to you for 50% of the value of the property, the equity is the other 50%. If there is no mortgage, then the equity will be 100%.

The Loan

A home equity loan is a lump sum that is granted to you for a determined purpose, all in one go. You can use it to consolidate debt, pay off your credit card debt to avoid an endless refinancing, or any one-time purchase. The interest rate is active from the moment the loan is approved until you finish paying for it.

The Line Of Credit

On the other hand, a line of credit gives you the possibility to spend up to a determined amount, but for different purchases and irrespective of the amount you spend each time. The tools that the bank or lender gives you to use the line of credit are special checks or maybe a card, similar to a credit card, which you can use while you still have credit.

Credit Limit

When the credit limit is reached, you must free credit or make payments in order to renew your credit and so be able to continue spending. This is similar in structure to a credit card, but radically opposite in the credit aspect, since you are backing your credit with the equity in your home.

Therefore, the interest rate is much lower than that of a credit card, enabling you to make easier payments and not having to refinance.

The Advantage

While credit cards usually have a fee that is charged regardless of the use of the card, the line of credit has no charge and naturally no interest if you do not use your credit or if you have paid off your balance and are leaving it for future use.

Not All Lenders Have This

Shop around, as we usually suggest when you are looking for the best deal you can get. Look into interest rates and APR which are different concepts. We must point out that as with all types of loan, the line of credit has expenses in the form of fees.

Even If You Do Have A Mortgage

The line of credit can be equally granted, for the amount of equity left in your home. It would be convenient to study the possibility of refinancing your mortgage to release more equity. This is advisable only if you have paid more that half of your mortgage or you have made improvements on the house and the current value is higher than that considered for the original loan.

Let me remind you, then, of the main difference: A line of credit is for several small expenses at different times. The equity loan is one lump sum.

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Kinecta HELOC Ad

Sunday, October 25th, 2009

Please note: Kinecta’s contact is now 800.854.9846

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Home Equity Line of Credit Information

Wednesday, October 21st, 2009

The home equity line of credit is a device used by homeowners who want to borrow against the equity in their home. There are several different types of home equity lines of credit. These differences are frequently based on the interest rate charged the homeowner.

Sometimes a home equity line of credit will have variable interest rates. With variable interest rates, the homeowner cannot know for sure from month to month what the interest payment will be. The interest rate on the loan will vary to the same degree as the interest rate set by the Federal Reserve Board.

In some cases the home equity line of credit offers a low introductory interest rate. These rates sound attractive, but they hide the fact that the homeowner will later be asked to pay a considerably higher rate. The homeowner needs to read the loan materials carefully in order to learn exactly what the payments could be at a much later date.

Other differences in the home equity line of credit often concern the costs of the application process. Some offers of a home equity line of credit come with a large one-time fee. Other offers for a home equity line of credit might avoid mention of such a fee but then add continuing costs. It is also possible that a home equity line of credit could tack on a balloon payment. This is a sizable payment that is demanded from the homeowner once the period of the offer of credit has ended. Alternate offers for a home equity line of credit could avoid requesting a high balloon payment but instead request much higher monthly payments.

If the differences in the various types of home equity lines of credit confuse the homeowner, then it may be better to consider alternatives to the home equity line of credit. The homeowner who does not want to get a home equity line of credit can either takeout a second mortgage or borrow from credit lines that do not use the home as collateral.

In order to borrow from credit lines that do not use the home as collateral the homeowner needs to seek out those who value what he has to offer. Perhaps he owns land in a distant region where the land value is going up. This could possibly be used as collateral on a different type of line of credit. A small business owner who did not want to risk his home for a home equity line of credit might need to think about using the business as collateral.

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Why Should You Go for Interest Only Home Equity Line of Credit?

Wednesday, October 14th, 2009

Many people talk about interest only home equity line of credit and many banks are out there with inviting advertisements about interest only home equity line of credit. The basic idea behind is to build up your line of credit utilizing the value of their homes.
It used to work both ways. Some may be interested in going for this kind of home equity line of credit and some others will think again and again before going for interest only home equity line of credit.
Do you know what kinds of offer banks make with regard to the home equity line of credit?
In fact, banks offer many options for the home owner to avail the home equity line of credit. For instance there are banks who advertise a plan with one interest rate for first five years and an adjustable rate for the remaining period based on prime rate. Typically they will put for first years more interest rate, say 5% more.
There can be many alternative ways. One of the alternate ways seen in an advertisement is like the following. First year the home owner pays 5.75% of APR and after that the rate will be increased by 0.25% each year until the rate touches 6.75% APR. From sixth year onwards you will be paying with 6.65%APR, until the credit line is cleared off.
Another kind of offer in interest only home equity line of credit is allowing an initial draw period followed by a repayment period. In this case during the draw period, you can get the loan amount and utilize for your purpose. You need to start your repayments at the end of draw period only.
One major advantage you can get from the home equity line of credit is to make good benefits from the credit line already existing. Once the line of credit is made available, you can increase the deductibles in insurance so that you can reduce the insurance premium payments.
There are some other benefits as well for home equity line of credits. You can use this credit line to get discount credit cards in the stores of your selection. Also these lines can be used to avail purchasing abilities with reward credit cards so that the card payment can be done later using the check from the line of credit.
The home equity line of credit offers you many facilities and you can make suitable economic management to make gains in your part. You require money to make money. So line of credit gives you money to make money. Once if you are satisfied with all the details of home equity line of credit, you can move ahead in materializing it. If you put perfect efforts in right steps, you will be assured of benefits.

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Home Equity Lines of Credit and How They Work

Tuesday, October 13th, 2009

You’ve certainly heard the ads on television that tell you to ‘tap the equity in your home’ when you need fast cash for home renovations, emergencies and even family vacations. There are two main types of home equity loans, a standard home equity loan, and a home equity line of credit. Before you decide to tap the equity in your home, you should understand what home equity debt is and how you can use it to finance the important things in your life.Borrowing against your home equity

Most homes are purchased through mortgages, a loan taken from a bank or lender and then paid back over a course of ten to thirty years. As you pay back that money, a certain portion of what you pay goes to the bank as interest, and the rest is applied to the principal. The amount paid on the principal builds ‘equity’, which is, in simplified terms, the amount of your home that you own. The amount of equity you have in your home can be used as collateral for a loan to finance college, pay for a wedding or make home improvements, among other things.

A home equity line of credit is not exactly a loan. Rather, it’s a promise from a bank or lender that they will loan you money up to a specified amount when you need it at the interest rates agreed upon. Unlike a home equity loan, where the bank loans you a chunk of money and you pay it back, a home equity loan of credit allows you to borrow money as you need it, like a credit card.Using a Home Equity Line of Credit

For example, if you take out a home equity loan for $10,000, you’ll get a check from the bank for $10,000 all at once. The interest clock starts clicking as soon as you sign the papers, and if you find that you need to borrow more money, you will need to apply again. If you really only need $2,000 of that money, you’ll still be paying interest on the entire $10,000 because you have the use of the entire $10,000.

With a home equity line of credit, the bank promises to lend you up to $10,000 over the next however many years. You haven’t actually borrowed any money when you sign a home equity line of credit agreement. It’s more like signing a credit card agreement. You won’t owe any interest until you actually use your home equity line of credit to borrow money. Once you’ve established a line of credit, if you find you need $2,000, you can draw that money from your home equity line of credit. At that point, you’ll owe the bank $2,000 and will start paying interest on a $2,000 loan.

There will still be $8,000 remaining on your line of credit. In other words, the bank has promised that it will loan you up to $10,000 during the term that the line is in effect, so you can still borrow up to another $8,000 as long as your loan remains in good standing. Even better, as you repay your loan, that money becomes available to borrow again, just like with a credit card.

So if you use $2,000 of your line of credit, you’ll have $8,000 remaining. If you then pay back $500 of it, you’ll be able to borrow up to $8,500 if you need it. You’ll only pay interest on the amount that you have actually borrowed, but you’ll have up to $20,000 available to you to use without having to apply for a loan every time you need one.Why choose a home equity line of credit?

Establishing a home equity line of credit before you need one can be an excellent idea. Unlike a standard home equity loan, you won’t be paying any interest on the money that’s available to you unless you actually use it, and you’ll only be paying interest on the amount that you actually borrow rather than on the entire $10,000 amount.

There are a few circumstances where a home equity loan makes more sense than a line of credit. Since standard home equity loans generally carry lower interest rates than a home equity loan of credit, it makes sense to use a home equity loan if you will be paying out all or nearly the entire loan amount in a short period of time. In other words, if you need $10,000 to pay for something up front, then it makes more sense to take out a home equity loan for $10,000. You’ll pay less in interest that way.

If, on the other hand, you predict that you’ll need about $10,000 to complete a project over the next year, but won’t need all of it at once, a home equity line of credit makes more sense. While your interest rate on the line of credit may be slightly higher than on a standard loan, you’ll only be paying interest on the amount that you actually owe each month.

Brian Jenkins is a freelance writer who writes about topics pertaining to the mortgage industry such as a Mortgage Company
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Wells Fargo Home Equity Lines Of Credit

Monday, September 7th, 2009

This line of credit is an open-ended, revolving loan that allows future advances up to the approved credit limit. You can use the money for home improvements, debt consolidation, medical expenses, investment opportunities, starting a business, education, a new car or boat, or any other major expense. Since Wells Fargo’s Home Equity Lines of Credit are revolving loans, you can use only the money you need when you need it, much like credit cards.

This credit is available at any time during your draw period with convenient access through your Wells Fargo credit card, checking account, ATM, online banking, or local bank. The draw period of a Home Equity Line of Credit is the amount of time the line of credit is open, usually ten years, after which the line of credit is closed and repayment starts. Advances taken out during this draw period may have small monthly payments in which only minimal amounts are paid toward the principle with the rest of the payment going to accrued interest, or interest only payments may be made. Wells Fargo offers plans that allow repayment of the Home Equity Line of Credit loan over a fixed period of time after the draw period has ended. Some of these plans allow up to thirty years repayment time.

Interest of Wells Fargo Home Equity Lines of Credit is variable and tied to the Prime Lending Rate, the rate in which most major banks charge their largest and most credit worthy customers. This variable rate usually has a cap to limit how high of an interest rate can be charged and some have limits as to how low the interest rate can get. Variable rates are subject to quarterly adjustment though some plans offer a fixed interest rate. The interest paid on Wells Fargo Home Equity Lines of Credit is only paid on the funds that are used and is usually tax deductible.

Like Home Equity Loans, Home Equity Lines of Credit have fees that may be charged for taking out the loan. Some plans call for one-time; up front fees while others have annual fees. Plans that offer low monthly payments during the draw period may require a balloon payment at the end of the loan period requiring the entire remaining balance to be paid. Other fees can also apply such as appraisal fee, credit check fee, and closing costs. The Federal Truth in Lending Act protects the borrower by requiring the lender to inform the borrower of all costs and terms when the application is given.

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Top home equity loan information and much more.

Sunday, September 6th, 2009

www.a1home-equity-loans.co.cc A comprehensive blog featuring the best information regarding home equity loans, how to get them and the best ones to get.

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A Home Equity Line Of Credit Can Boost Your Spending Power

Thursday, September 3rd, 2009

Having equity in your home is beneficial in more ways than just ownership of your home.
Of course equity signifies that you are well on your way to owning your home free and clear.
You should take a great sense of pride in the progress you have made toward owning your home. Many lenders allow you to take advantage of equity you have in your home in the form of a line of credit.
This can benefit you in many ways:
Many homeowners are using what is known as a home equity line of credit to borrow from the equity their homes for various reasons: taking a summer vacation, financing home improvement projects, paying off other consumer debt, and a host of other reasons.
You can use a home equity line of credit in a manner similar to what you would use a credit card for. The major difference in that you receive a higher spending limit. The cost of the higher spending limit is your home.
A home equity line of credit, commonly referred to as HELOC, is fairly easy to obtain given you are credit worthy and have equity in your home. In many cases, you are able to receive low interest rates and other perks for obtaining a home equity line of credit. You are typically able to borrow up to 85% of the appraised value of your home less what you still owe on your home. For example, if your home is appraised at $100,000 and you owe $30,000 on your home, you can qualify for a home equity line of credit up to $55,000.
Obtaining a home equity line of credit is not much different from obtaining a mortgage. In fact, when you take out the line of credit, you are subject to many of the same closing costs as your initial mortgage. For example, when you close on your home equity line of credit you might have to pay an application fee, appraisal fee, attorney’s fees, title search, and points. As with a mortgage, negotiating these fees is key because ultimately the cost of your home equity line of credit is increased because of the fees. Ask your lender to detail the costs you are being asked to pay so you can better determine what to negotiate. Then, ask that one or more of the fees be eliminated or reduced.
You might be subject other continuing fees with your home equity line of credit. Since these fees vary by lender, you should inquire about them before obtaining the line of credit. Typical fees associated with a home equity line of credit include membership fees and transaction fees. These fees, as with the closing costs, increase the cost of your home equity line of credit.
As with mortgages and other loans, you should shop around for the home equity line of credit that has the best terms for you. This includes the interest rate you are charged, associated fees/costs, and repayment terms. Use each of these factors to make a decision on a lender.

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