Category Archives: Home Equity Loans

What Are Home Equity Loans?

Home equity loans and home equity lines of credit are solutions for borrowing a lump sum against your home’s equity. This equity could be used in many ways, such as making home improvements or consolidating debt.

These types of loans usually have lower interest rates than do other types of consumer loans, such as loans secured by personal property or loans secured simply by a borrower’s signature (unsecured loans). First mortgages (the primary loan on a house) generally have the lowest interest rates. Home equity loans have allowed millions of Americans to take control of their debt.

The average household now has nearly $ 10,000 in credit card debt, and borrowing against the value of your home can allow you to pay those bills through debt consolidation.

Home equity loans may have a fixed or variable interest rate. Home equity lines of credit may be more risky. These types of loans can be of great help and benefit, but it’s important to understand the risks attached to them.

These types of loans differ from full refinances in that the first mortgage in not replaced with a new one. The homeowner simply accesses the equity that’s available in the property and borrows against it, thereby creating two separate mortgages, along with two separate payments.

Home equity loans can be a great financial management resource tool when used responsibly. They can be used for debt consolidation, home improvement and more.

Home equity loans are fixed rate home loans that allow you to tap into the money you’ve already invested in your home to finance larger debts at a lower interest rate than most revolving credit options*. To find out what your current home equity is worth, simply subtract your outstanding mortgage balance from your home’s current value.

Home equity loans are a popular financing option for homeowners who need additional cash. These loans usually offer a lower interest rate than credit cards. Home equity loans have a fixed interest rate and a fixed term (the amount of time you have to repay the loan), usually 10 to 15 years.

You make monthly payments on the loan until it’s all paid up. 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.

Most commonly, mortgages are set up to be repaid over 30 years. Home equity loans may also have fees. Home equity loans also allow you to tap the equity, so that you can get the cash without getting refinanced.

David Castro is the author of the Home Equity Loans Blog, learn more at http://www.homequityloanshelp.com

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What are the requirements to get a home equity line of credit? See this video for more information.

Transcript

What are the requirements to get a home equity line of credit? It’s really not that different from getting a mortgage, but you do need to understand that a home equity line of credit is a bank product. It is a private product. The bank is going to keep that on their books. Where mortgages, 99.3% of all mortgages taken out in 2014 were government backed or insured. Anytime you get a mortgage, that lender or bank has to satisfy the guidelines that the Federal Government passes down. These would be through Fannie Mae, Freddie Mac, FHA, VA, or USDA. Our home equity line of credit is what’s called a Non-QM Loan. It is a Bank Loan. It is their product. They set their own guidelines and policies of what they require in order for you to qualify.

A good rule of thumb is if you qualify for a mortgage, you will qualify for a home equity line of credit. Some of these banks don’t even have a minimum credit score that they look at. They’re looking at the total health of the file. Some that do publish credit scores we’ve seen as low as 610. As high as 700. To be honest with you, it’s all over the board. It’s kind of a double-edged sword. It’s good because if you can’t get qualified for a mortgage, there might be an opportunity for you to get qualified for a home equity line of credit. It’s bad because there’s no uniformity. I can’t tell you across the board what it takes to qualify for a home equity line of credit, but you do need positive cash flow. You need decent credit.

Sometimes it would help to have some equity, about 10%. Although there’s quite a few banks out there that do 100% financing. We would recommend that you have at least 10% financing because most banks go up to 90% loan to value. If you liked that video, be sure to like it here, subscribe to our channel. Take care. God bless.

You guys are still here? Awesome. Click some where on this screen, I’m not really sure where, but I’ve picked out two more videos that I believe you’ll find a lot of value from. Take care. God bless.
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Home Equity Loans Canada- Your Questions Answered

In a November, 2007 report, the Canadian Association of Accredited Mortgage Professionals (CAAMP) stated that in the previous 12 months, 17% of mortgage holders took out home equity loans or increased their mortgage. The average equity loan was $ 35,400.

What are people doing with all this money? Paying down debts, sending the kids to school, investing in their homes – there are many possible answers to that question. If you’ve ever considered tapping into your home’s equity, the following FAQs can help you decide whether home equity loans are the right strategy for you.

What Are Home Equity Loans?

Home equity is the difference between the market value of your home and what you still owe on the mortgage. So if your house is valued at $ 300,000 and you still have $ 260,000 outstanding on your mortgage, your equity would be $ 40,000.

Home equity loans enable you to borrow against that equity. These loans are also known as second mortgages because they are a second loan (the primary mortgage being the first) that uses your house as collateral.

How Much Can You Borrow?

With most home equity loans you can borrow anywhere up to 85% of the amount of your home equity. For the case above, with $ 40,000 in equity, the homeowner could borrow $ 34,000.

Some lenders have more generous options, even offering to lend 100% of the amount of equity in your home.

How is a Home Equity Line of Credit Different?

A home equity line of credit (HELOC) is much the same as a standard line of credit, but it uses your home’s equity for security. With a HELOC you can typically borrow up to 90% of your home’s equity. With $ 40,000 in equity, you could obtain a HELOC for $ 36,000.

With a HELOC, you do not necessarily have to use all of the credit at once. You can use it as needed and pay back what you borrow, just like a standard line of credit.

On the other hand, home equity loans are one-time, lump sum loan. If you need more money, you’ll need another loan.

The general guideline is that a HELOC is best for those who need access to varying amounts of money for ongoing expenses, whereas a home equity loan is better suited to those needing a specific amount for one large expense, like a home renovation.

What About Interest Rates?

Home equity loans typically have fixed interest rates, while HELOC rates are variable. The interest rates for both are typically pegged to an institution’s prime rate, and are often significantly lower than those charged for vehicle loans, credit cards and personal loans.

What is Mortgage Refinancing?

With refinancing, you pay off your existing mortgage and obtain a second mortgage for a lower interest rate. With a “cash-out” mortgage or refinance you can borrow more than what you owe on your mortgage. You can then take the extra money and use it for expenses like tuition, home improvements and so on. Refinancing may include costs for mortgage fees and prepayment penalties.

What are the Pros and Cons?

On the plus side, home equity loans provide low-cost credit for important expenses. In extreme cases, the risks are that the home market slows and you end up owing more than the value of your home, or that you overspend and default, which means the loss of your home.

For many people the pros outweigh the cons. To be sure if a HELOC or loan is right for you, it is best to consult with a mortgage professional.

For more information on home equity loans and equity loans in Canada contact CanadianMortgagesInc.ca

Considering a Home Equity Loan?

http://www.goamplify.com – Home Equity Loans may be a good option. Interest rates on Home Equity Loans are generally lower than other types of loans or credit cards. This is because a Home Equity Loan is secured by the equity in your home. If you are considering a Home Equity Loan for debt consolidation, to pay off a higher interest loan or for a dream vacation, Amplify Credit Union can help.
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Home Equity Loan or Second Mortgage: How does it work? Part 1 ( Video Blog for Home Owners)

Home Equity Loan or Second Mortgage: How does it work?  Part 1  ( Video Blog for Home Owners)

Make you home to work for you in times of need. Which one has better rates Home equity loans or second mortgage?
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Home equity loans are becoming easier to get, but that’s not a good thing. There is only one reason to get one, ever.

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The only legitimate use for a home equity loan | Clark Howard

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