Home Equity Loans
When to Look Into Home Equity Loans
Home equity lines can be perfect for a variety of people in different financial situations.
Here are some scenarios where a home equity line of credit can come in handy.
- An Unexpected Expense – Home equity loans have some of the lowest interest rates around and essentially,
you are borrowing from yourself. If you have an open home equity line of credit, no matter what the expense
you can be prepared.
- Home Improvements – What better to finance your improvements to your home than your home equity? You can
use a home equity line of credit for a new roof or to paint your home or to complete the addition you need
for your growing family.
- Loan Consolidation – If you have accrued too many debts there is nothing wrong with taking out a low interest
home equity loan to consolidate your bills and get your on firmer financial ground. Just make sure you get your
spending under control and reinvest your money back in your home equity as your situation improves.
If you fit into any of these categories, contact your mortgage broker today. You really can't go wrong with the low interest
rates currently available.
3 Benefits to Home Equity Loans
There are many benefits of taking out a second mortgage or home equity line of credit. Here are several of those benefits:
- Extended Repayment Terms – Home equity lines of credit can have incredibly flexible repayment terms.
Some will not require payment in full until you sell your home. This isn't to say you should allow debt to
languish, but the extended payment terms on loans like these are a huge benefit.
- Payments on Interest Only – Home equity lines often only require a payment based on the interest you have
accrued. This makes for much lower monthly payments.
- No Closing Costs – Most home equity lines of credit are available with no closing costs and no money out of pocket for you.
There are always some fees, but with the right lender, these fees will be built in to their commission structure.
Home Improvements? Take a Second Mortgage
If you want to improve your living environment and your home equity, but you don't know where to get the money to complete the
improvements, the answer may be far simpler than you think. Many lenders will be more than happy to help you take out a home
equity line of credit for home improvements. Of course, it will depend on how much home equity you have accrued, but many
lenders, because you are improving on their investment, will look well upon home improvement equity lines of credit.
Don't avoid improving your home out of fear of a second mortgage. If you think about it, there is nothing wrong with taking equity
out of your home to reinvest it in your home. You are just putting that money to good use and making more money by wisely improving
on your investment.
If you are interested in exploring the possibility of a second mortgage, talk to a few lenders and compare interest rates. Choose
someone you trust and go for it. Smart home improvements will exponentially increase the value of your home.
Shopping for Equity Loans Online
An online lender like us is going to offer you the widest range and selection on equity loan rates, terms and programs. The best part
about working with an online vendor is that they can get you competing quotes and you can still compare and make the best decision for you.
By using resources on the internet you may find other viable online lenders, but if you do solicit quotes from these people, be wary.
If they are not accredited by a third party or they have any blemishes on their business record, you may not want to share your personal
information with them. Don't farm out your personal information to any loan site you come upon so you feel like a better consumer. Your
information is vitally important so protect it!
Finding a No Closing Cost Home Equity Loan
When you saw the closing costs for your home purchase, you may have been a bit appalled. There are a lot of junk fees thrown in with the
legitimate ones and this may be something that is holding you back from considering a second mortgage. Stop right now.
Home equity lines are far simpler than a first mortgage on your property. In many cases there are no closing costs, or the closing costs
are very low. Therefore, not only will you have money available at a low interest rate, you don't even have to pay out of pocket to get that money.
If you can find a no closing cost home equity line with a good interest rate there is no reason not to move forward.
Many people even take out a home equity line just to have it available in case they need it. Talk to your mortgage representative
today and find out which program will fit your needs.
Take The Max with Your Home Equity Line of Credit
Here is something to consider when you plan to take out a home equity line:
Did you know lenders will give you a lower interest rate if you take out a larger home equity loan? It may seem scary to take out a
loan for more than you need, but if you have self discipline, why not get the lower interest rate?
A great tactic is to take the maximum loan so you can secure the lowest interest rate and then pay it back almost immediately.
A line of credit, like a credit card, will stay open even if the balance is paid. This is a great way to secure a terrific
interest rate and barely pay any money to keep a line of credit open.
You do want to make sure they won't penalize you for using this tactic, but typically they will only issue a penalty fee if
you close out the line of credit too early. A good mortgage broker will have more strategies like these so try to develop a
solid relationship with your broker. You'll get better advice in the long run.
Consolidating Your First and Second Mortgages
Due to the refinance boom and the increasing values of home, many people now hold a first and second mortgage on their property.
At some point you don't really need that second mortgage so you may want to consider consolidating your home debt under one
mortgage. It is easy to refinance your first mortgage to absorb your second and you'll be left with only one will and potentially
lower monthly payments depending on the interest rate you secure.
You will have tons of refinancing options so find a mortgage broker you can trust and compare rates, terms and loan amounts across
the board. You'll have this loan for a long time so choose wisely.
Interest Only Equity Loans – Quick Cash and Low Payments
If you need money quickly, at a low interest rate an equity loan may be your best or only option. One of the best parts about an
equity loan is that you can typically get a larger amount of money, for a low interest rate with incredibly low monthly payments.
This is because your payments on an equity line are based on interest rather than on the principal of the loan you have borrowed.
This is not to say you should squander the proceeds from your equity loan, but if you need money quickly and you don't have a ton
of budget flexibility to make large payments towards your loan an equity line may be just the ticket.
Investing Your Home Equity Loan Wisely
If you decide to cash out your home equity in order to invest in other money making ventures, make sure you consider the
following factors in your decision making.
- Make sure you realistically weigh the risks involved with taking out a home equity line and putting your cash into another
investment. Real estate is a very steady investment vehicle, so if you are considering taking home equity out to become a day
trader, you may want to think again. Look at the risk and reward scenarios that are associated with your potential investment
before you leap.
- You are going to need to pay back any home equity loan that you take out. This is not a situation where you can borrow from
your home equity and then just hold the loan. Make sure you new investment vehicle will not impede your ability to pay back
your home loan.
You should consult a financial advisor before removing home equity for investment in a different money making venture. Protect yourself
and your home by making smart decisions based on good information.
Retirement Planning with a Home Equity Line of Credit
Any financial advisor will tell you to be wary of how you spend the money from your home equity line of credit. This is not money to spend on
going out to dinner and grand shopping sprees. You really should only use home equity dollars for home improvement, debt consolidation or
Investing your home equity in the right retirement fund could be a great way to spend your money and make sure it's making money for you.
Perhaps you want to put it into an IRA or some other long term, interest bearing vehicle. The best way to go is to consult a financial
planner on the best way to reallocate your investments.
They will help you assess whether it is better to pull out home equity and reinvest it in another vehicle or if you should leave the equity in your home and sit tight. Follow the advice of a trusted
professional – they will most likely lead you down the right path.