Equity loans – Answer to all your loan requirements

Equity loans – Answer to all your loan requirements

Dec 21

Are you amongst those who is looking for making the payment for your child’s college? Or you are amongst those who are looking for the money in order to get their home renovations done? Suffering from the burden of huge debt and want to regulate by means of a consolidation loan? If you are planning to make any such expenditure then you might consider your home equity once. Closely looking at the above situation you will find that it requires a huge amount of money and all these requirements cannot be met by means of any specific loan or personal loans. In fact the amount of money required is possible only by means of pledging your property or a valuable asset with the lenders. So what does one need to do? One should look out for such loans and home equity loans are found to be the most suitable ones for these requirements. Before one takes a loan one must confirm if all the requirements are suited to them and they can get the best results on the basis of the same.

 

What is home equity? Home equity is basically the difference between the selling price that your home can fetch and the amount that you owe in the form of mortgage. You can consider the home equity loan as an option that can help you cover all your costs. Your home equity financing can be of two types: home equity loans or your home equity line of credit. With home equity loans the lender grants you with the full amount at once and you have to start the repayment of the loan as soon as you get it. Whereas in the latter i.e. Home equity line of credit the lender provides you with the time limit and your maximum amount and you can draw that amount from the bank as per your requirements, whether altogether or one by one.

The equity line of credit acts as a credit card and allows you to draw the loan amount as and when you need it. Also you will have to make the repayment of only that much amount which you have used. The choice of your type of loan depends upon you and therefore you are free to make your own decisions while choosing for this loans for people with bad credit. However when you consider your home equity loan options you are advised to properly shop around and make a smart comparison between the offers that are provided to you by the different banks, various credit unions and the mortgage companies.

Shopping around for a better deal could help you in the future as it will come to as ease in repayment. But one thing that is the most important of all should be considered while taking the home equity loan- Never forget that your home equity loans are backed up by your own home, which clearly means that your lender has the full right and authority to seize or repossess your house in case you fail to make the repayment of the loan.

ABOUT HOME EQUITY LOANS

Home equity loan as said and told above is the loan that you undertake keeping your house at stake. These are the type of loans where you keep your own home as a collateral security. The repayment procedure of these home equity loans is the same as the normal loans where you make fixed monthly repayment during the life of the loan that contributes towards your interest and the principal. The only difference being that of your home being attached to your mortgage unlike the regular loans.

Your lending institutions have the full authority to foreclose your home if you do not make the repayment. The amount that you are allowed to borrow in a home equity mortgage is generally 85% of the equity of your home but the actual amount that you can take as the loan also depends upon various other factors like your income, credit history and obviously the market value of your home. Before you consider any home equity mortgage always take the advice of your friends and family members who posses the significant experience in this field. You can ask their experiences and have a conversation with them regarding the choice of lenders. You can take their advice and then do the rest of the homework and market survey yourself. Always remember it’s your home at stake and you have to choose the best deal.

ABOUT HOME EQUITY LINES OF CREDIT (HELOC)

In very simple language the home equity line of credit also known as HELOC is the type of revolving line of credit. The home equity line of credit basically acts as a credit card where you can draw money according to your need. In HELOC the entire loan amount is not given to you at once instead the banks fix your maximum limit and you are allowed to withdraw the money as per your financial need using your special credit card (that connects to your account), or by writing the check. However, the lending institutions fix your credit limit and you are not allowed to go beyond that. There is an added advantage that you get from your home equity line of credit and that is you get the tax advantage if you take such type of mortgage which in not available to you with other mortgages. Your HELOCs also requires you to keep your house as collateral just like your home equity loans. This could again put you in danger as you might lose your home.

Make a prudent decision

Knowing all about the equity loans could be of great help when you are looking for bigger loans supported your house. One should try and avoid any kind of loans as far as possible. These loans once taken prove to be a great help and offer great relief but once you are over with the initial happiness phase and the repayment sets in you will find it difficult to carry out the expenses including your fixed monthly expenses. This often forces one into a miserable life since a major portion of their salaries goes towards the payment of the monthly installments towards the loans they have taken.

While equity loans offer multiple benefits in the form of an extended payment period, easy approval process, lower monthly installment, low interest rates and more disposable income; one should remember that all these facilities are offered at the cost of your house. In any circumstances you have to clear the loan else you stand the risk of  losing it.

 

Therefore, all you need to do is to study and do your homework properly and smartly and grab the best deal for yourself.