bodyC asked:


Ok, this is unconventional - My mom is disabled. Her home was affected by Katrina. Her home is finally fixed. However, during the past two years, she’s accrued close to $100,000 in credit card bills to pay off some of the repairs since a lot the funds from the insurance and the government were not enough. Additionally, since she is disabled and receives little from the government, she has been unable to pay enough or on time. Her interest has gone up to 25-30% on 4 cards. I have good credit. I own a condo. I want to at least help her by getting a home equity loan (basically a second mortgage) even though I want to get a loan in a couple of years to buy a house. She’s considered bankruptcy with Chapter 13 in order to not jeopardize her home, which she paid off with some of the funds received from Katrina. It seems she has no way out; and I hate to be in this situation from my own financial balance. What can be done? She needs serious help; and I don’t want to jeopardize my credit.

WESLEY

Ken Charnly asked:


A home equity loan may be exactly what you’re looking for to fix any financial issues you and your family may be experiencing. Here are some scenarios in which you might wisely choose a home equity loan:

An Unexpected Expense: As far as loans go, you won’t find more reasonable interest rates than on a home equity loan. Better yet, you are basically your own lender! Choosing a home equity loan will help you cover any unexpected expense.

Home Improvements: When you use your home equity to make improvements on your house, then you are actually making your money work for you. This is an investment, and one that will make your strongest asset, stronger still. Add on a deck, make one room into two, or build an extra bathroom - you’ll only increase the value of your home when it comes time to sell.

Loan Consolidation: Americans are notorious for high amounts of credit debt. If you are one of them, then taking out a home equity loan to pay off some of those debts makes a great deal of financial sense. The interest you will pay on your home equity loan will be much less than high credit card rates, and you’ll save a ton of money when it’s all said and done. 

If your family is facing an unexpected expense, your home needs some improvements, or you have some high interest debt that you’d like to pay off, then choosing a home equity loan is a great choice.

The world is now seeing a new innovative way of using home improvement loans - as a means of correcting the economy in a time of recession. In this current global downturn certain countries have implemented low interest home improvements loans and even credits and grants as a means of helping citizens impove their homes and boost the economy at the same time by spending money, by putting money back into the economy.

 



JOHNATHON

laurie m asked:


house worth $560,000 (value)
mortgage loan balance $347,000.00/home equity balance 46,000 the line was 131,000 and we’ve spent 86,000 on home repairs. We have 20,000.00 in credit card debt from an adoption. We make too much to get a credit on any of it. would it make sense to use $20,000.00 of the 45,000.00 left on the equity line to pay off the credit cards???thanks!

ISIDRO

Johnnie asked:


Should I refinance my mortgage, which will save me $400 per month by combining a costly 9.99% home equity loan with my primary, or use the $10000 I need to close to pay off my credit card debt (which would pay off all my credit cards)?
I’ve already been approved for the loan…I have good credit so that $10,000 in debt doesn’t kill my credit score which is still over 700.
The home equity loan is $35000 at 9.99%, my credit cards are not much higher than this so I am most anxious to get rid of this bad loan…Am I thinking about this the correct way?

TRACY

cme4ins asked:


I contacted a debt solution program but they say my credit will be hurt until I get these paid off. My credit is real good I just have alot of credit card debt that I would like into one lump sum with a fixed monthly payment. I cannot take a home equity loan due to a second mortgage for a business loan. My local bank said I don’t have enough assets for a personal loan to cover the whole amount.

JOSH

Devora Witts asked:


There is a difference between these two ways of obtaining credit. As great as the differences are, the uses are also radically opposite. The only thing in common is the equity that your home represents as collateral to the credit you get and the way you spend it. If you own a home, a line of credit might be just what you are looking for.

A Necessary Definition

Home Equity is the amount or portion of the value of your home that is not affected by a mortgage. If you have one granted to you for 50% of the value of the property, the equity is the other 50%. If there is no mortgage, then the equity will be 100%.

The Loan

A home equity loan is a lump sum that is granted to you for a determined purpose, all in one go. You can use it to consolidate debt, pay off your credit card debt to avoid an endless refinancing, or any one-time purchase. The interest rate is active from the moment the loan is approved until you finish paying for it.

The Line Of Credit

On the other hand, a line of credit gives you the possibility to spend up to a determined amount, but for different purchases and irrespective of the amount you spend each time. The tools that the bank or lender gives you to use the line of credit are special checks or maybe a card, similar to a credit card, which you can use while you still have credit.

Credit Limit

When the credit limit is reached, you must free credit or make payments in order to renew your credit and so be able to continue spending. This is similar in structure to a credit card, but radically opposite in the credit aspect, since you are backing your credit with the equity in your home.

Therefore, the interest rate is much lower than that of a credit card, enabling you to make easier payments and not having to refinance.

The Advantage

While credit cards usually have a fee that is charged regardless of the use of the card, the line of credit has no charge and naturally no interest if you do not use your credit or if you have paid off your balance and are leaving it for future use.

Not All Lenders Have This

Shop around, as we usually suggest when you are looking for the best deal you can get. Look into interest rates and APR which are different concepts. We must point out that as with all types of loan, the line of credit has expenses in the form of fees.

Even If You Do Have A Mortgage

The line of credit can be equally granted, for the amount of equity left in your home. It would be convenient to study the possibility of refinancing your mortgage to release more equity. This is advisable only if you have paid more that half of your mortgage or you have made improvements on the house and the current value is higher than that considered for the original loan.

Let me remind you, then, of the main difference: A line of credit is for several small expenses at different times. The equity loan is one lump sum.



IAN

LifeSaver asked:


I tried to re-finance my 1st and 2nd mortgage with these two banks and was not successful due to owing more on my mortgages than my house is worth (& high credit card debt of about $25K). My spouse and I have student loans to pay for ($60K) and it is very depressing for us. What can we do to fix this financial and emotional problem. More details..we make over $200K per year but the bills and unexpected situations keep coming up. It is now affecting our marriage and we may be separating because of this financial tornado. we have two kids and a dog to care for also. It is tough but right now we are just maintaining to pay bills from pay check to pay check. How do we attack these issues without killing one another and becoming angry about it when we bring up the subject? Are there any highly seasoned real estate agents or financial gurus (anyone w.knowledge) to help us? Any internet or 800#’s? We need help REALLY bad!!

KERMIT