Friday, February 13, 2009

Use Home Equity Against A Loan

If you are a home owner and well prepared to access the equity in your home you may arrange for finance without the need of selling the property. Home equity is quite advisable and useful. The equity is the value that is excess of the value of your home over the amount you owe.



Generally home equity loans are second and third mortgages. There are basically two sources in home equity. When you keep on making mortgage repayments, after a period of time the amount in arrears against a property declines and the real estate value is appreciated. The collective equity can be obtained after making mortgage payments for a number of years.



Good rates on home equity loans are on a regular basis given by the banks and finance companies as real estate is clear to be a very safe and sound venture. When the economy is on a continuous boom, the real estate has a long record of appreciation. As the market booms the values of all properties move up.



When the lender lends you money he is concerned with the safeguard of it; he only wants to give money to those borrowers who can and are willing to provide security to the lender against any risk that he may have to face due to defaults in repayments.



By way of refinancing, a home equity loan can be turned into a first mortgage. A reverse mortgage also works parallel to the home equity loan and it is suitable to senior aged people. In reverse mortgage the amount equal to the value of home equity is lent to the borrower; rather than lending in lump sum, a reverse mortgage spends out in monthly or quarterly payments. The borrower, if is prepared to use home equity against loan, the lender will definitely approve the loan and offer a loan on the lowest possible rates.



by Max

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