December 26, 2006

Refinancing

What Is Refinancing, And When Is It Useful?

Home refinancing means that you will be changing your existing loan over to a completely new one. This means that your interest rates and existing terms will be changed, usually for a better and cheaper deal. When you refinance, you will need to pay the same fees as when you originally got your home loan, as well as application fees.

Refinancing is the best option for those who are looking for a lower interest rate or want to lower their existing monthly repayments. Refinancing can also be used to increase the amount of money that is being borrowed. When refinancing to a new loan, it is important to be aware of the fees that are being charged, as well as the new rates being offered. You may also be penalized for paying your old mortgage off early, so make sure you are aware of all of the associated costs before signing up.

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December 22, 2006

Home Equity Loan Refinancing

Home equity loan refinancinf is a loan in which the borrower uses the equity in his home as collateral. Home equity loans is a lump sum loan with a fixed interest rate and a fixed payment. The amount of loan is determined by credit history, income, and the value of the collateral.

Second Mortgage and Home Equity Loan.
The amount you can borrow is depends on the difference between the value of the property and the amount of your 1st mortgage. Better known as the equity you have on your property. There are two types of second mortgages.


A. Home equity loans.
B. Home equity lines of credit.

November 21, 2006

Home equity loans vs home equity lines of credit

 Equity Loans vs. Equity Lines of Credit 

A Interest rates on home equity loans and home equity lines of credit are almost always lower than non-introductory credit card rates. Current interest rates, loan cost information and helpful calculators can be found on websites such as www.bankrate.com. You could also call banks in the area to see whether they offer any unpublished promotional rates.

However, when deciding between a home equity credit line and a home equity loan, there are other factors to consider besides interest rates and fees.

For one, you need to have available equity in your home to borrow against. Traditionally, lenders like to see a loan-to-value ratio of 80 percent or less. In other words, if your home is valued at $200,000, the first mortgage and any additional home-equity loans should total less than $160,000. However, many lenders today offer loans up to 100 percent of home value.

You should also understand the differences in a credit line vs. a home equity loan. A credit line is revolving, with a variable interest rate that fluctuates depending on market conditions. A credit line requires monthly interest-only payments.

Adjustable rate home equity loans

Adjustable rate, home equity loans can confuse borrowers

 

By HELEN HUNTLEY, Times Personal Finance Editor
Published November 12, 2006

If you have an adjustable rate mortgage or home equity loan, do you understand its terms? Do you know how high your interest rate could go up and how soon that could happen?

Are you sure?

Researchers at the Federal Reserve say many homeowners with adjustable rate loans underestimate how much their interest rates can change or are clueless in the matter. The problem is worse for households with below-average incomes and education

November 14, 2006

Home equity line of credit rate

Home equity line of credit rate, major consideration when acquiring loan
 
 
Home equity line of credit is a credit facility where you secure repayment of your loan by your equity on your house. This is advantageous for those you who have realized or is about to realize the greatest American dream, ownership of their own dwelling.
 
Various reasons lead consumers into taking advantage of using their dwelling as collateral such as in a home equity line of credit. Primarily is the fact that as compared to other loans including, credit cards and other unsecured credit, home equity line of credit rate is lower.
 
Additionally, the interest paid in a home equity line of credit is tax deductible. Thus, it helps trim down the tax payables.
 
Another factor for the popularity of home equity line of credit on top of the home equity line of credit rate, which is lower, is the fact that you can take out a loan of up to 85% of your total equity on the house.
 
This is especially important for repairs and renovation necessary to make the house safe and conducive to living.
 
Additionally, consumers prefer to take out a loan against their equity for purposes of children’s education and in some cases, to settle medical bills.
 
Consolidation of debt is also another advantage of taking out a loan using the house as collateral. This is because of the convenience that you only owe one institution with all your previous and prevailing loans, the home equity line of credit rate is specifically helpful in this case.
 
You consolidate your debt and you minimize the interest rates payable, on top of the fact that interests are tax deductible.
 
Consumers take advantage of the convenience and flexibility including the lower home equity line of credit rate, however, it should not be forgotten that using your house as collateral entails some risks. Primarily, you are at risk of loosing your dwelling. If it happens to be your primary dwelling, consider the nightmare of eviction.
 
Financial experts therefore recommend that if you want to take advantage of home equity line of credit and the reasonable home equity line of credit rate, you may need to do your homework.
 
Search for the most reasonable interest rates, because interests in a home equity line of credit may be variable, you may need to find the lowest interest rate and the most flexible payment terms. If possible, avoid the lure of paying interests only on your credit line; this will avoid being trapped by the balloon payment at the end of the term.
 
If possible, choose to pay the interest and part of the principal on a regular basis.
 
You may also need to check with the lending institution what are the conditions that will make them consider you as in default and what conditions you may need to follow to avoid balloon payments, which you may not be ready for.
 
It is thus recommended that you scrutinize the application a bit and ask all the pertaining questions in order for you to make sure that you dwelling will not be at risk in the transaction.
 

It may also be helpful if you can find other sources of information to guide you with the intelligent decision of acquiring loan against your dwelling even with the consideration of home equity line of credit rate. The internet may be a good place to start even before you contact an agent.

Home Equity Line of Credit

Home Equity Line of Credit

Owning a house is the Greatest American Dream. Additionally, having a house to save you from monetary needs adds up to the benefits of owning the greatest American dream.
 
You have tightened your belt during the time you are saving for your house. Now, that you have enough equity in that property, you may loosen up a bit by making use of your equity through Home Equity Line of Credit. 
 
Home Equity Line of Credit or HELOC, can help you in myriad of financial necessities. It can help you have a fund when you need it and for whatever purpose you may need it.
 
Although, you should be careful because putting your house as collateral may cause you to loose your house if you fail to pay your debt. This should make you think many times before you embark on taking money through home equity line of credit.
 
However, if your purpose of taking out money by means of home equity line of credit is to pay for medical bills or children’s college education, these expenses are inevitable.  Thus, taking out money by means of home equity line of credit can be your best bet.
 
Additionally, if you want to consolidate your debt, HELOC or home equity line of credit may also be beneficial. This is because compared to credit cards and other unsecured credit facilities, the interest rate in a home equity line of credit is somewhat smaller. Another benefit of this means of taking out money is that consumer credits interests are tax deductible.
 
However, having said the benefits you may have from acquiring a credit through home equity line of credit, you may also need to look at the possible consequences if you fail to pay your debt.
 
The most important consideration is the possibility of loosing your house to pay off the debt. 
 
It is thus recommendable that while you are considering the flexibility of a credit line, if you need a lump sum fund, you may consider taking out a Home Equity Loan instead. This is because in a home equity loan, you pay the interest and part of the principal debt regularly. 
 
This is in contrast to the variable interest rate that applies in a home equity line of credit. Additionally, in a home equity credit line, your payments balloons at the end when you need to pay the principal amount of debt. 
 
The flexibility of the home equity line of credit extends up to paying only the interests and paying the entire principal loan at the end of the term.
 
This makes it quite hard, and if you are not ready for such balloon payment, the risk of loosing your house is intrinsic in this case.
 
This is the reason why financial experts recommend that before you sign any contract that puts your house as collateral, you may need to scrutinize yourself a bit. 
 

  • Will you need the money lump sum? Ask about Home Equity Loan.
  • Do you need fund periodically? Ask about Home Equity Line of Credit.
 
Consider also asking for payments terms, interest rates and what conditions will make the lender consider you in default. These questions once answered may help you realize if putting your house as collateral is the best solution to your monetary needs. 
 
There are other credit facilities, for this reason, you may need to do your research first before deciding.
 
Various debt management websites can help you understand the eccentricities of financial management that will help you avoid loosing your most precious asset.
 

 
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