Mortgage Home Equity Loans

. . asked:


I have debt totaling 30,000. I own a home in which I have over 150k equity in. I want to pay this debt once and for all. What would be the smartest way to do this? Should I refinance, take a home equity loan or set up a payment plan? My mortgage rate is 5.375 so refinancing would put me into a new higher rate since rates have gone up. I also have access to $10,000 in my 401k that I could borrow. I just want to make the right decision here. Any help would be great! Thanks.

COURTNEY

southernserendipiti asked:


I’m looking to buy my first house, and I want to seem reasonably intelligent before I sit down with a mortgage broker. If I am interested in purchasing a home in need of a few, minor repairs, can the cost of repairs be included in the home loan? Or, say: for aesthtic purposes, the lawn needs to be sodded…let’s say…to prevent erosion, etcetera. Can that be included in the loan? Or, do both of those instances fall under the category of home equity loans? Ahhh - here’s an additional question: Just for curiosity’s sake, how long must you own a home before you qualify for a home equity loan?

HERSHEL

Finance Brand Blog asked:


Bad Credit Home Equity Loans are a Good Thing

If you are in the unfortunate situation of looking as loans for people with bad credit, take heart. You are not alone. More and more people need to take out loans for some financial need, and one possible source is a bad credit home equity loan.

People end up with a bad credit rating for a myriad of reasons. Late payments and bankruptcy are obvious factors. Not so obvious is the debt to income ratio factor. If you happen to have college loans that are around $20,000 and marry someone with the same amount of college loan debt, you both may now have bad credit. Even if you own a home and have a pristine credit history a large loan taken out for an emergency will greatly affect your credit score. If your credit score is lower than you like, the good news is that it doesn’t have to stay that way forever! There are many loans for people with bad credit and a bad credit home equity loan is one place to start.

A home’s equity is the current fair market value of the home, minus any mortgage payments left to be paid. What this boils down to for a lender is what they can get for the home if they have to seize it from the owner for failure to pay. Even with a low credit score bad credit home equity loans are available for up to 90% of the equity in the home. Most lenders are comfortable giving equity loans for people with bad credit. Since there is collateral involved finding such a loan shouldn’t be a problem. The tricky part will be finding a bad credit equity loan with an interest rate that you’re comfortable with.

Reasons behind taking a bad credit home equity loan vary greatly. Currently, homeowners are opting to take their home’s equity and then reinvest it in their home through updating and remodeling. Or, maybe someone is able to pay off a sizeable amount of credit card or school loan debt with a home equity loan. Not only will it be a relief to pay off all your other creditors, your interest rate will go no where but up!

If you’re looking at loans for people with bad credit and own a home, a bad credit home equity loan is a good option. Interest rates will be lower than for any other loan you could get and it’s relatively easy for a homeowner with any credit rating to get one of these loans. Regardless of your reasoning behind getting a bad credit home equity loan, be careful as to whom you choose as your lender. Read the fine print and plan a strategy to increase your credit score with the equity loan. Your financial security will increase and your credit score will thank you.

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MARY

Kae B asked:


I am interested in doing some updates to my home totaling about $50K (windows, bath, kitchen and small interior remodel). I haven’t really priced things out so this might be an inflated estimate, but I’m sure it’s in the range.

Given that I don’t have anything near that in the bank, I wondered about a home equity loan. I’ve owned my home for nearly five years and in that time the value has increased quite a bit. i love my neighborhood and the value is only on the rise.

Anyone know when the time is ripe to take a home equity loan ? How much equity should you have in your house? And will the new loan wrap up into your mortgage or be a completely separate payment?

HARLAN

Andy M asked:


Home equity loan is one among the most popular home loans available today. It is a second mortgage loan with characteristic properties of a secured loan. The popularity of the home equity loan has attracted many people to home equity loan. In general, equity loans does not have arise much complaints from the people. However as any other coin, home equity loan also have two sides. Hence, the detailed analysis of the loan is essential to differentiate the features of the home equity loan. The cross analysis of the pros and cons of the home equity loan helps to avoid stepping in to the home loans with false expectations.

The pros of the home equity loans include the advantages that a borrower can enjoy from the home equity loan. The benefits of the home equity loan usually outweigh other secured and unsecured loans since it is a risk free loan for the lender. The home equity loan provides maximum amount, in proportionate to the value of the equity. For good houses situated in the real estate booming locations, home equity loan lenders used to provide high appraisal of even 125%. In most cases at least 80% appraisal is always provided. The attractive interest rate is another advantage of the home equity loans. Usually the interest rate of the home equity loan is selected in fixed rates.

Among the pros of the home equity loan, the most pronounced benefit is the tax deduction. The amount taken as home equity loan below $100,000 is exempted from the tax payment. Hence, the equity loan can be used to raise money for any purpose such as emergencies, debt consolidation, medical loan, home improvements, education or any personal reasons. The repayment schedule of the home equity loan can be conveniently selected as 10 years or more, which can be even extended up to 30 years. Moreover, the home equity loan processing has become easy and less time consuming with the introduction of internet and online lenders. The verification of the title deed and the credit score are usually the time consuming steps. However, in the online processing these verifications has become limited and the home equity loan approval is done with in minimum period of time.

However the home equity loans are not devoid of cons. One of the major cons associated with home equity loan is the risk of losing your favorite home, if you make any default in the payment. The lenders will not be bothered much about the repayment as they will be focused to foreclosure the property. Hence the borrower is advised not to take large amount as home equity loan. Home equity loan is also not advantageous for persons, who are in the beginning of their career since they cannot easily shift their position, if they have a liability. However, the people in the proximity of the pension also cannot manage a long run home equity loan. In the home equity loans, the borrowers have to keep in mind the fact that the long repayment schedule will cost you more interest. To add on, if you are unlucky the home prices will slashes down and when you are about to sell the home, it will be a loss.

In brief analysis of the pros and cons of the home equity loan, it is clear that home equity loan will be advantageous for the larger loan amount. However, you have to be careful about interest rate and other conditions involved in the deal.



DIRK

animalhappy asked:


Ramon’s credit union is willing to loan an amount up to 70% of the appraised value of a home. Based on this information what is themaxium potential amoung of credit that’s available to Ramon for a home equity loan

PRESTON

Justin T asked:


Wanted to know if it would be a good idea to get a home equity loan to pay off my mortgage, truck, and a couple other bills that i have? I have heard that u can take the interest off taxes but don’t know

MITCHEL

Bruce Owens asked:


Home equity loans can allow Canadian homeowners to leverage the gains they made in what was until recently a red-hot housing market into investments in other sectors. Home ownership, which was once the key fundamental to Canadians’ wealth accumulation strategies, while still important, will likely take a back seat as a strategy in the near term as investment savvy home owners shift their accumulated wealth into other markets. Leveraging built up home equity is a highly advantageous method of making this switch in investment tactics.

The most recent economic forecasts indicate that Canada’s overall housing market has settled into what will be a period of slow growth. Home owners who saw the equity in their homes grow by leaps and bounds as Canada enjoyed its longest sustained housing boom since the Second World War are now sitting on substantial capital that is locked up in their home. But the return on this capital will only grow moderately over the next several years and it is not clear that gains in housing prices will necessarily outstrip inflation.

The latest view from economists at the TD Bank Financial Group is that sales of new and existing homes are likely to continue to decline in the near term and housing prices will only increase modestly. TD’s forecast is that “sales are likely to continue to decline in the coming quarters and price growth will slip to 2% on a national average basis in 2008 and rise only to 3.5% in 2009.” They note that this national average will vary by regional markets, with some local markets that saw the biggest run ups in housing prices - such as those in Alberta and British Columbia - experiencing a drop in housing prices as regional markets adjust. But, they predict, “Most markets will see low to mid single-digit growth.”

The Financial Post reports that most leading economist are expecting the Bank of Canada “to keep interest rates at 3% in 2008 before hiking them in 2009 as inflation becomes more of a concern and the U.S. economy picks up.” Of course, as Canada’s central banker hikes its lending rate, banks, trust companies and other financial institutions will raise their prime rates in due course.

With current low interest rates, homeowners looking for more continued and substantial growth in their existing assets can take out a home equity loan for investment purposes and purchase a risk balanced investment portfolio that is highly likely to carry a much better return than the moderate housing price increases that are forecast for the rest of 2008 and into 2009. The bonus is that the interest paid out on a home equity loan taken out for investment purposes is tax deductible. Effectively, the tax savings a typical homeowner/investor is likely to get will in most instances offset a large portion of the borrowing costs. If gains on the investment outstrip, as they should, the moderate gains forecast for housing purposes, homeowners who leverages their home equity in this manner will see real growth in their overall assets.

An abundance of caution should of course be used when leveraging your home equity in this manner. Ensuring that the investment portfolio you choose is well balanced is a key. Working with an experienced and knowledgeable financial planner is highly recommended, as is working with a mortgage broker to access the best available rates and terms for a home equity loan while interest rates remain at their current low level.



WENDELL

Amanda B asked:


My husband I are looking to borrow about $35 thousand dollars out of the equity of our home to help finance our son’s college and to do some small renovations. We bought our house ten years ago for $170 thousand. It was recently appraised at $320 thousand and we have payed our mortgage down to $130 thousand. We are wondering if it makes more sense to refinance and pull $35 thousand out or if it makes more sense to take out a home equity loan. We are looking for the option that raise our monthly mortgage payment (or loan payment) the least.

ELIAS

Bethany asked:


My Grandmother wants to give my husband and I her home. We are more than willing to take her up on this offer but are a little confused on how to go about getting a loan to cover the repairs to the home. Would that classify as a Mortgage? Home Equity? And if so could we get the VA loan since we are eligible for that?

MURRAY