A Home Equity Loan is a secured loan and therefore the borrower needs to keep his property as collateral. Home equity loans are more common on homes already borrowed against, though this need not necessarily be the case. For instance, you brought a new home but are unable to pay the monthly installments, then you borrow against your already mortgaged home hence your home “is” the equity.
Home equity loans are generally based on a given percentage of your home’s appraised value which is typically 80%, minus your remaining mortgage balance. For example, if your home were appraised at $150,000, 80 percent of that total would be $120,000. Home equity loans are one of the most common types of financing for doing improvements on your house. These loans are not necessary used for home improvements but can also be used to simply obtain extra cash. Home equity loans are designed to be paid off over a fixed period of time. Home equity lines of credit, like credit card agreements, require only that the borrower make a minimum monthly payment.
When consolidating debt into a Home Equity Loan, make sure you pay off the loan promptly, rather than just sending the minimum payment. Home equity loans are most commonly second position liens (second trust deed), although they can be held in first or, less commonly, third position. Most home equity loans require good to excellent credit history , and reasonable loan-to-value and combined loan-to-value ratios. Home equity loans are what forms the basis of a sound economy but the lack of access to home equity loans can bring a strong economy down. For that reason the government often has to step in and adjust interest rates in order to make home equity loans more attractive and in this way to bring life to the economy.
Borrowers are required to pay all fees associated with refinancing an existing ACU home equity loan/line of credit, with a minimum fee of $125. There are no points charged and there is no annual maintenance fee. Borrowers are usually given a credit card or checkbook to make purchases using the line of credit. Many require that you borrow a minimum amount each time you make a purchase. Borrowers in Texas have a good news that the loan rates have become very attractive due to competition between the lenders. One can borrow relatively large sums at lower interest rates.
Home equity loans are used when you want to borrow a specific dollar amount against the equity in your home, and are available on both homestead and non-homestead properties. A homestead property is generally considered your primary residence in Texas. Home equity loans are at times disadvantageous; many people apply for this loan to pay off extra debts, like the credit card dues. But this facility can be temptation for the borrowers, to take more credit on their cards, decreasing there equity in return. Home equity loans are often used to consolidate other debt with high interest rates (like credit card debt), to finance large expenses (such as college or a wedding), or to purchase other costly items . There are two main types of home equity loans.
Home equity loans are advertised on the airways, newspapers, magazines and just about anywhere else a homeowner may see or hear the advertisement. Some people feel that home equity loans are trouble waiting to happen. Home equity loans are usually drawn by writing checks as opposed to one lump amount of cash, so you only pay interest on the money you actually use. Lowestrate can not only help you find the lowest rate home equity loans, but we?ll also provide you with the best home equity loan information you need. Home equity loans are a sensible way to use the equity you’ve accumulated in your home for home improvement, education expenses, bill consolidation or whatever you’d like. As a homeowner and member of AFCU, you have the advantage of borrowing up to 90% of the equity in your home at a competitive rate with a repayment term of up to 15 years.
The loans are offered now by all major banks (Countrywide, Wells Fargo, Washington Mutual, Chase) and there are countless online services that let you get rates quoted from 4 lending institions at once. Many banks offer teaser rates or interest only loans which have little money due now, but in the near future come due with higher payments which may leave many borrowers in debt over their heads.
- About Home Equity Loans
- Depending on the market, and the terms of the original mortgage, people can still walk away with a home equity loan that is at a lower interest than their first mortgage home loan. Home equity loans are generally widely available to all homeowners, even to those who have had some negative marks on their credit reports
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