Home Equity Loans Information

| January 2, 2012

Right off the bat, let’s settle some minor confusion. Home equity loans and home equity lines of credit are similar, but slightly different since they present different options. Your home equity loan will be a second mortgage behind your first TD. These type of second mortgages are traditionally used to borrow money. They are also used by homeowners who may have marginal credit with a FICO score on the south side of 620.

If you’re considering a home equity loan you’ll be happy to know your ship has entered port and those men and women standing on the dock are frantically waving loan application papers since they know that home equity loans are much safer than most others. Why? Well, common sense will tell you that once the loan process is completed and your funds are tucked away in your bank account, guess what? You pledged your home as collateral, and if you default on the loan, the lender, even though they are in second position, still stands an excellent chance of getting their money back. You must also be cognizant of the fact that if you lose your home, you might be sleeping under the Interstate 10 freeway underpass, ergo, making sure payments are made will, hopefully, be a top priority.

So what can a homeowner do with this pot of gold? Many use a home equity loan to pay high-interest credit card debt. Others may opt to invest in that mountain A-Frame for summer vacations and winter skiing. The home equity funds can also help a son or daughter with furthering their education. Most, however, use home equity loans to upgrade and renovate their residence.

By this time you may be wondering why you should choose a home equity loan and not others. Tax savings is one thing. You may be able to deduct payments made, but always verify first. These loans usually have a lower interest rate, and easier to qualify for. (see paragraph one) You’re also able to borrow more money since your lender has placed a lien on your home.

Now, the downside. If you fail to make your payments, you might lose your home. Watch out for unlicensed prevaricating scammers. They’re like ants at a lakeside picnic. They are everywhere. Shop around for the best deal. Compare offers. Be smart. P.T. Barnum said: There’s a sucker born every minute. Don’t let it be you.

Category: Home Loan

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