Home equity loan

In simple terminology, a home equity loan is a loan taken against your house. A home equity loan is also called a mortgage or a second mortgage. Another synonym for home equity loan is equity release schemes.

While taking a home equity loan you are actually borrowing the worth of your house. If the house is completely owned by you, then the term used for home equity loan is "mortgage", otherwise if your house is not fully paid off but has equity, it is called a "second mortgage". From now on we will use one term for both to facilitate better understanding. We will call them Home Equity Loans.

A home equity loan is an extra loan that you take against your home in addition to your mortgage; hence this is called a second mortgage. This enables a home owner to encash equity without refinancing the first mortgage. Most people are under the impression that the only way to raise cash is by selling their homes. However reality differs and factually one can take a second mortgage to free up the first mortgage also.

Equity is the difference between the amount you owe on your current home mortgage and the current value of your home. Furthering this definition, suppose you sell your home, the amount of cash left in your pocket after paying off the mortgage is called Equity. This equity when taken as a loan from a lender, without actually selling your home comes to be known as home equity loan. Many lenders or loan companies allow you to borrow bigger amounts calculated by subtracting the balances of outstanding mortgages from 125% of the market value of your home. However the actual equity is the difference between appraised worth of your home and the balances of your outstanding mortgages. There is no bar on how you can use the home equity loan. You can use it for any purposes as it suits you.

A home equity loan is usually a one-time fixed interest rate loan, which is paid out at one go. The rates of interest or the cost of the loan will depend on options you choose viz. the term of the loan and the amount; of course another important factor has always been your credit rating. The longer the term of the loan, the more you pay out as interest, also if the amount is more, the more interest you pay. As always with any liabilities one undertakes certain words of caution are advised. Check all your options thoroughly before making a decision. Choose the amount carefully and take only what you need and specify the term which you think would be comfortable for you to repay in. No point accumulating liabilities in exchange for spending on pleasures or acquiring unnecessary assets. Home equity loans are easily accessible to people with poor or bad credit rating since the lender is taking a lesser risk as the loan is secured against their home.

A Home Equity Loan usually means that you get the best interest rates on the loan, i.e. you get the loan at a lesser cost compared to other loans because of assured security, but one should always remember that the house is at risk lest you fail to repay the Home Equity Loan.

by Otello Zorina

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Why Are So Many Home Owners Taking Advantage?

To define a few terms, equity is the difference between your home's appraised - or fair market - value and your outstanding mortgage balance. A loan refers to the amount of money you borrowed from a lender providing you with the mortgage. So basically, the idea with home equity loans is to borrow against your home's equity as a very effective way to get some things you need at a good price.

Homeowners, mostly the elderly, and people with low incomes or with poor credit must be very careful and wary when borrowing or having a loan based on their home equity. This is because there are some lenders who target these borrowers and exploit those who innocently may be placing their house at great risk. Take note of this factor and be sure to educate yourself about home equity loans.

Why Have Home Equity Loans Become So Popular?

Borrowing against the value of a home has become increasingly popular. There are two key reasons for this surge. People are taking advantage of low interest rates and tax deductibility.

The tax changes that occurred in 1986 have eliminated deductions for most consumer purchases. As a way to get around these changes in tax, consumers began borrowing up on their home value in order to make purchases. Home equity loans thus became a method adopted by homeowners to buy goods and still get a deduction.

Here is an example of how home equity loans are being used today.

Let's say that you bought your home for $95,000 and made a 20 percent down payment of $19,000. To pay the remaining $76,000, you then took a first mortgage. On the day you closed on your home, you automatically had 20 percent equity. As you pay off the principal, you gain equity and your home grows in value.

Now, let's say that you have paid $12,000 toward the principal and your property. Remember that you property was valued at $95,000 when you bought it. Now, since you have made the payment on your principal, your $95,000-home is now worth $115,000. Your beginning equity ($19,000), plus the principal you have paid ($12,000) and the increase in your property value ($20,000) gives you $51,000 in equity.

Banks and borrowers both benefit from home equity loans. For that reason, interest rates for home equity loans are lower than for other loans.

Like most things, home equity loans also have their downsides. The disadvantage to home equity loans is that if you default on the loan, the lender could foreclose on your home. For this reason, home equity loans are statistically most suited to stable, middle-aged borrowers.

Home Equity Loan - Beware Of Scams

A home equity loan permits one to borrow a certain amount of money, using the equity of your home as collateral.

Homeowners, mostly the elderly, and people with low incomes or with poor credit must be very careful and wary when borrowing or having a loan based on their home equity.

4 Home Equity Loan Factors To Watch Out For

1. Equity stripping. Careful! This home equity loan lender has the possibility of stealing the equity that you have built up.

2. Balloon payment (hidden terms) with home equity loans. Examine meticulously the terms of the loan. Your monthly payments can be lowered, as the lender is offering, that you pay back only the interest. You will be facing foreclosure if you can not pay the principal with this type of home equity loan.

3. Loan Flipping. This is when the lender inspires you to repetitively refinance your loan and to borrow more and more money. A certain lender offers you refinancing, and uses the availability of extra money, declares that it's due time that the equity you built starts "working" well for you. After a few payments, the lender then offers you a larger loan for a family vacation. You accepted the offer and the lender then refinances your original loan and gives you the additional cash.

4. Credit insurance packing. In this case, the lender will add credit insurance to your home equity loan that you do not necessarily need.

by Dean Shainin

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Fund Against Your Home Equity

Bad credit home equity loans refer to a kind of money provision which provides you fund against the equity value of your home without considering that how bad is your credit status. The loans are secured and facilitate you with a number of benefits. If you have your own home then, you can avail these loans.

The loans can be taken to fulfill any of your personal needs like refurbishing your home, paying medical bills wedding, education fee, consolidating you debts and so on. There is no such restriction for use of these loans.

Bad Credit Home Equity Loans are secured loan so even if your credit status is not in sound financial status still you can avail the fund against your home. Besides availing fund, you can also improve your credit status for smooth future lending. Thus the loans give you one extra benefits besides providing you fund. Bad credit home equity loans possess many distinguished features:

* It allows you to avail large sum of money with flexible repayment tenure and low rate of interest. You can avail amount up to £75000 under these loans.

* It offers you to choose the repayment tenure of your choice. However, the normal period ranges from 5 to 25 years.

* Its low rate of interest coupled with long repayment tenures keeps your monthly outflow under control and you pay the installment smoothly.

* You get opportunity to uplift your credit status. As the loans acts also as a financial tool. By making repayment on time, you can improve your credit status which will keep your future lending smooth,

Bad credit home equity loans are available offline as well as online. Before applying, a close familiarity with prevailing trend of financial market is essential. Through online survey, you can get a fair idea of loan market with different competitive loan quote. Comparing them in terms of better deal will lead you to choose the best loan program.

by Johns Tiel

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A Guide for the First time Home Buyers

As a first time home buyer, do know the first thing about the cost of buying a house? Most first time buyers don't. Here are some things to keep in mind when you get ready to make the largest financial decision of your life. A mortgage broker marketing company will be your best bet to get all the information you will need to make the purchase. Use this as general information or your personal mortgage marketing tool.

First of all, consider how much can you afford? A mortgage marketing company will tell you that the average person can afford a house that cost about 3 times their annual income. So with an income of $40,000 a year, a person could afford a house that costs about $120,000.

Wow, where are you going to get $120,000? Don't worry. If you qualify, you will take a loan from a bank to pay for the house. This is called a mortgage. Mortgages can be paid back within years of taking the loan such as 30 years. A mortgage marketing tool, sometimes known as a calculator can calculate the price of a home you can afford. It can also calculate the monthly payments you will make depending on the amount of the loan and the size of your down payment.

Down payment? What's that? A down payment is up front money you will make to the bank that is offering you the loan. The larger your down payment, the lower your monthly payment will be. In general, a bank will want to see at least 3% to 20% of the cost of the house as your down payment.

Now that we have discussed the down payment, let's discuss the closing costs. The closing cost is the is the amount it will cost you to have the keys handed over to you. The cost of paperwork and title transfer make up this up front money. In some cases, the bank will add the closing cost to the loan, which will add to the monthly payment. Generally, up to 8% of the sales price is the amount of the closing cost.

As a first time buyer you will be overwhelmed emotions, good and bad. Find a home that you would like to purchase and contact the mortgage marketing firm selling the property. They will take you through all the steps to get you into your dream house. Remember, this is your first time but a mortgage broker marketing company has sold houses a time or two.

by Caitlina Fuller

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Save your Money with Bank Foreclosure Homes for Sale

Bank foreclosure homes for sale provide excellent opportunities to everyone. Those who want to own a home but have not yet been able to do so owing to financial constraints can expect to strike a beneficial deal with lender foreclosures.

And those who are waiting for good investment opportunities in real estate will also find it to be a lucrative proposition. They can buy bank foreclosure home for sale for a fraction of their market worth in foreclosure auctions and sell them later for a good price, earning great returns in the process.

What are foreclosure homes?

Foreclosure homes refer to the property reclaimed by banks and other lending agencies when the home owners start defaulting on payments. In normal course of event, the bank issues warning and notices to those who have taken loan, to rectify their erratic payment behavior. But, when they are still unable to pay, the banks confiscate the property so that they can sell it in the market to recover their money. As such all foreclosure properties are essentially lender foreclosure.

The concerned lending agency does not have much interest in the foreclosed property. All they want to do is to sell it pronto so that they can recover their tied-up money. Therefore, we normally have auctions for Bank foreclosure homes for sale where the highest bidder gets the ownership title over the property after paying the requisite amount.

Advantage of lender foreclosure properties

- The most obvious advantage is that they are great value for money propositions. Foreclosed property is, often, 20 to 50 percent cheaper than its actual market worth, making it a sound investment.

- It's a win-win situation for concerned parties. The lending agencies recover their lost money and the buyer get sound value for money. The lending agencies cannot recover the property and just sit on them. They will, then, incur great expenses on maintenance, upkeep and utility bills of the property.

- You can also get bank foreclosure listings giving extensive and comprehensive details of the property so that you can circumvent the brokers and directly approach the banks for the deal.

by anirban

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Home equity loan online: entail funds against your home

Sometimes the house we live in can save us from difficult conditions. It is an asset that can be used to generate money to solve financial problem that may arise. Home equity loans online are suitable option to get funds to solve financial emergency.

Home Equity Loan Online is a secured loan that requires a borrower to pledge equity of his home as collateral. The presence of collateral enables borrower to avail the loan at lower interest rates.

Borrower can use the loan amount for any purpose like:

• Home renovation

• Buying car

• Debt consolidation

• Paying off outstanding bills

• Electricity or utility bills

• College fee

The loan amount that a borrower is offered is determined by the existing equity in the home. It is calculated by subtracting all the outstanding debts from present market value of the house. A loan amount equal to or lower than equity in your home is offered. The repayment period of the loan ranges from 5 to 25 years.

Home equity loans online are available are of two types: closed end and open end equity loan online. In close end loan you can borrow money in one lump sum amount at once and cannot borrow anything further. In open end you can borrow an agreed sum of money whenever you need. One can opt for flexible or fixed interest rate suiting his conditions. The process of home equity loan online is comparatively longer than the other loans as the lender evaluates the collateral and verifies the documents before sanctioning the loan. Using internet you can view different quotes by many lenders and apply for one with lower rates and best terms that suits your needs.

Home equity loans online can be applied by bad creditors also. Those suffering from CCJs, IVA, arrears, late payments, bankruptcy and defaults can easily apply. Make sure you repay the loan on time as the timely and regular payments will slowly improve your credit scores.

Home equity loans online is a strong financial tool that can solve any financial mess that you might find difficult to handle. The loan is approved on time before the purpose of taking loan gets diluted.

by Dina Wilson

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