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Home Equity Line Of Credit Explained

Sep 11, 2009 Mortgages

Your home is likely your greatest asset and you can put its value to good use with a home equity line of credit.

The maximum credit that you can access is dependent on how valuable your home is. Banks will extend a percentage of the equity that you have accumulated. As an example, let’s take a home worth $400, 000. If the title is clear, the bank may grant you 50% of that equity, which would in this case be $240, 000 to be used in any way you see fit.

If there is still an outstanding balance on your mortgage, they will give you 60% of the equity of the assessed value minus the balance on your mortgage. So, take that $400,000 home, with $150,000 still owing on the mortgage. Your equity is $250, 000 and 60% of that would be $150,000. In some cases, if you have other debt, that percentage may be lower.

As long as you’ve faithfully made all your mortgage payments and/or your credit is in good standing, you should expect your line of credit to be approved. It is still considered a loan, however, the interest rate charged on a home equity line of credit is as low as your mortgage payment, or prime plus a few points. It is much lower than a regular bank loan and infinitely lower than interest charged by credit card companies. It’s the cheapest way to borrow money.

Once you have started taking money out of your line of credit, you have to start making payments. You don’t have to pay the principal if you don’t want to. You can leave the principle untouched for as long as you own the home if you wish. All you need to do is make the monthly interest payments. Whatever the interest is on your remaining balance, that is all that needs to be paid for as long as you own the home.

You can access your equity by check or by transferring between accounts. However, the smart way to use a home equity line of credit is to save it for major purchases. Should you get into financial trouble, your line of credit can be used as emergency cash. However, you can purchase a vehicle, take an amazing vacation or make your equity work for you by purchasing a revenue property, vacation home or mutual funds and other types of investments.

Home renovations are another reason why people dip into their home equity through a line of credit. It’s the cheapest way, in terms of interest, of borrowing money. It’s like borrowing money from yourself.

Jennifer has been in the Florida real estate business for over 15 years, so before you think about taking out a loan you should stop by her site to read further information that cover Florida home equity lines of credit and bad credit home equity line of credit.

Tags: "mortgage, Florida home equity line of credit, Home Equity Line Of Credit, mortgage loans, mortgage refinance, Mortgages

The Basics About Home Equity Loans

Aug 21, 2009 Real Estate

If you are on the market and are wanting to get a home equity loan, then it is important that you cover your grounds before agreeing to any terms. In most cases, lenders will often sell homes for the amount owed on the property if the homeowner falls behind on payments.

So think about that reason that you wanted to take out the home equity loan, and you should go over everything that you possibly can to ensure that you will be able to pay back the lender. Some reasons that people will take out a home equity loan are for home improvement projects, debt consolidation, or maybe a new boat or car.

Since home equity loans are for a large amount of money, usually about half the value of your home, lenders will spread the repayments out anywhere from 15 to 30 years depending on how much you borrowed.

The longer the repayment of the loan is the more money the lender is going to make off you of course. But this gives those who are financially hurting a reasonable monthly payment, which is put together with your first mortgage.

When you take out the loan, you will have to pay off the capital amount. Not only that but you will also have to pay off the interest of the capital also, so you will be paying both of these, in most cases, in one payment each and every month.

If you manage to work out an agreement with your bank about paying off an interest loan only, there will be two agreements. You have one for the capital payments and then you will have one for the interest payments.

This is why the more knowledge you have on home equity loans, the better off you will be in the long run. If you select the wrong type of payment plan, you could find yourself paying off interest only for many years, and then 7-8 years later you will realize you haven’t even started to pay the actual loan off yet.

Finally, there are various equity loans available; however, if you are in good standings with your current loan, then you may want to reconsider equity loans for re-mortgaging.

Tags: Florida equity loans, home equity, Home Equity Line Of Credit, home loans, loans, property, Real Estate, refinance, Refinancing

What To Know About Home Remodeling Loans?

Jul 17, 2009 Mortgages

Most people think about home improvement projects as all the little things you can repair or do around your house to make it more livable. But home improvement projects don’t have to be restricted to small budgets or simply involve a few minutes of work on the weekend.

Today’s home improvements are becoming more costly and many times home owner must take out a loan to cover the project or borrow money from some existing asset. Using borrowed money to upgrade a home is a much cheaper option than buying a new home and moving for most people.

Larger house improvement projects that require financing could including adding an addition to your home, remodeling your home to add more space, upgrading the appointments in a kitchen or bathroom, installing a new furnace or cooling system, replacing a roof or installing siding or simply putting in a new swimming pool.

There are lots of different ways to pay for a large home improvement, but taking out a loan explicitly for the purpose up upgrading your home is always an option that’s worth looking into. Most personal loans can be broken into one of two categories:

Unsecured home remodeling loan: When you get an unsecured loan, it means you basically are getting the loan based on your income and credit score and you are not putting anything up for collateral. Unsecured loans are usually for smaller amounts and often have a greater interest rate due to their increased risk. If you don’t have any equity built up in your home this may be a good option for you.

Secured loan for a home improvement|upgrade|remodeling project: A secured loan is based on an item of value, so it’s less risky to a lending institution. Often a secured home improvement loan is made using the equity, or extra value, your home may already have. Secured loans are often larger loans that have lower interest rates. A home equity loan or home equity line of credit is essentially a secured loan that is often used for home improvements or remodeling projects.

Each borrowing option has some positive and negative aspects and there’s no loan that’s perfect for every situation. There are credit cards, bank loans and even online low rate loan programs now. Some loans are better for smaller home improvement projects while some are much more useful for large home projects. Borrowing money to improve your home will generally raise the value of your home, though the value may not always exceed the amount of money you borrowed initially.

Tags: home equity, Home Equity Line Of Credit, Home Equity Loan, home improvement, home improvement financing, home improvement loan, housing, loans, money, Mortgages, Secured Loan, Unsecured Loan

How To Get A Loan For A Home Improvement

Jul 16, 2009 Mortgages

Home improvement projects don’t have to be small jobs you finish on the weekend. With home sales still low, many people are starting to improve the houses they live in, and they’re doing it with major upgrades that require fair amounts of money.

Today’s house improvements are becoming more costly and many times home owner must take out a loan to cover the project or borrow money from some existing asset. Using borrowed money to remodel a home is a much cheaper option than buying a new home and moving for most people.

Any sort of large scale house upgrade will almost definitely require some sort of financing for most people. Upgrading a kitchen can easily cost $18,000 or more, an updated bathroom may cost $12,000 or more and a new roof and siding may be as much as $25,000 or more, depending on the size of the home.

There are lots of different ways to pay for a large house improvement, but taking out a loan explicitly for the purpose up upgrading your home is almost always an option that’s worth looking into. Most personal loans can be broken into one of two categories:

Unsecured home upgrade loan: When you get an unsecured loan, it means you basically are getting the loan based on your income and credit score and you are not putting anything up for collateral. Unsecured loans are usually for smaller amounts and often have a greater interest rate due to their increased risk. If you don’t have any equity built up in your home this may be a good option for you.

Secured home remodeling loans: A loan that has some sort of collateral, such as existing home value, tied to it is called a secured loan. Secured loans usually have smaller rates of interest and are available from many different lending institutions.

The type of loan you pick should be based on the size of your house improvement project, your credit score, your income and the amount of equity or collateral you have readily available. Remember that there are many different types of loans to choose from. You might also want to see if you are approved for an FHA Title 1 home improvement loan program from a local bank. Borrowing money to improve your home will generally raise the value of your home, though the value may not always exceed the amount of money you borrowed initially.

Tags: home equity, Home Equity Line Of Credit, Home Equity Loan, home improvement, home improvement financing, home improvement loan, housing, loans, money, Mortgages, Secured Loan, Unsecured Loan

Equity Loans Which One Is Right For You

Jul 7, 2009 Mortgages

When thinking about equity loans, borrowers are encouraged to weigh out the difference in rates for refinancing, home equity loans, and home equity credit lines. Equity loans are more than often based on a fixed rate, adjustable rates, prime rates. If the equity has dropped below market value, then refinancing the home would be a better option than home equity loans or credit lines.

Refinancing is a great way to get your homes equity up to par. This option will give you more money to spend, and in most cases it is used to improve the market value of a home so it meets the certain stipulations.

Refinancing can breathe life back into your home when the market value drops, as many homes are doing do to the financial state the U.S. is currently in. In almost every case this is the best option to restore your homes equity.

On the other hand, if you want to remodel your home, roll your bills into one, payoff tuition, or else make new purchases, then the home equity loans are most likely choice. You will need to have good credit to get a home equity loan, and in most cases you must have a good chunk of your first mortgage paid off also.

Alternatively, if you feel that you will need extra cash over the next ten years, then you may want to consider the equity lines of credit offered. The lines of credits are prime rate loans with conditions, but for the most part, if you need money it is available. Most lenders provide their own types of checks to the borrower when taking out credit lines.

What type of equity loan is the best? Well as you can see, it really depends on your needs, but reviewing your different options can help you make a better decision. If you need to rebuild the equity on your home, then refinancing is the better option; while, if you are considering debt consolidation, then home equity loans are your best bet.

Finally, reviewing each option is the best solution for finding the right loans; no matter what option you choose, you should spend some time reviewing your different options to ensure you are getting the best possible rates from a respected company.

Tags: "mortgage, finance, financing, home, Home Equity Line Of Credit, Home Equity Loan, houses, loans, Mortgages, property, Real Estate, Refinancing