knucklenuck asked:


We built a home to sell or rent and own it outright. We’d like to tap into some of the equity on the home but Countrywide (where we have the mortgage on our main home) has said that the new regulations don’t allow an equity loan on a home listed in the MLS. They said the home would have to be off the MLS for 6 months before we could qualify. If we had listed it ourselves there would have been no problem. I’m wondering if this is true with all lenders or if it’s a Countrywide policy.

MARTIN

Alan Lim asked:


A home equity loan is an excellent option to go for if you want to find a solution to your mind-blowing financial problems. If you have bought your home and have been paying for your mortgage for a while now, your home will surely have appreciated. This will entitle you to an increase in home equity, which you can use to borrow against. Here are some guidelines to help you in proper decision making when taking on a home equity loan:

What’s the difference between a Home equity loan and Home equity line of credit (HELOC)

A traditional home equity loan involves giving you lump sum cash, while a HELOC simply gives you a credit card or a check book which is set at a maximum amount which you can use for your purchases. Choosing from between the two should be a matter of personal decision, one that is based on your financial needs as of the moment. A traditional one may seem notorious as it tends to get used up more uncontrollably when in the wrong hands. However, if you look at it closely, the same problem can be encountered with a HELOC. Generally speaking, the closing costs for both are the same even if the HELOC involves a lot more workload for your lender. This is due to frequent accounting that needs to be made on your outstanding balance and frequent interest rate changes, which would have translated to higher fees.

Going for a Low Closing Cost Home Equity Loan

The competition in the market for mortgages today is quite heavy. Closing costs today has never been as ideal with excellent offers available. There are low closing cost loans, and there are even some who offer no closing costs. However, you should be vary when pursuing the latter as there are quite a number who do not offer excellent services - you get what you pay for (and not pay for) anyway. Usual closing costs involve appraisal, documentation fees, title examination, and so on. Closing costs from lenders vary greatly. If you want to get the best value, make sure you shop around for a reputable lender which will give you the best offer and a good closing cost.

What are the Costs Involved

The good news is that loaning against your home equity can be done without having to hurt your bank account. As was mentioned, most lenders offer low closing costs these days. The average closing cost today amounts to more or less one to 1.5% of your loan amount. This will surely be within reasonable budget considering the processes involved. Take note that taking on a home equity loan should be a lot cheaper and less complicated than first mortgages. It is just a matter of finding the best deal and negotiating with the right lender.



DOUGLAS

CS asked:


I have about 30K in equity. Like to do some home improvements. Current mortgage each month is 1200.00. How does the loan work in conjunction with the monthly payment? Is it seperate, bundled into the payment, etc? Is there a term to pay off the loan or is it part of my 30 year fixed? Overall would like to know how much more I will be paying over my 1200.00 for the loan each month with current assumptions. Fees to get the loan started? Thank you!!
It’s pitiful that I’m asking a question and I have people preying on my question with these fairy tale lenders. Give me a break people- did honesty and ethics fly out the window here? Have some humanity

TRENTON

Johns Tiel asked:


The home equity loans are good for one time large monetary plans. The borrower in these loans can use the equity of their home as collateral for getting the required money. Not only the good credit holders, a special type of loan has been made for the bad credit holders too and these are known as the bad credit home equity loans.

Large monetary requirements like buying a car, repairing your house, paying large debts off or paying huge medical bills can be handled with these loans. It offers an amount ranging from £5,000 to £125,000 with a repayment term of 5 to 15 years. For getting this loan amount you must place the equity of your home as collateral. The value of the collateral decides the loan amount in it. So, you may find some lenders that are willing to offer 100 percent of the home’s value.

This equity is decided by finding out the difference between the market value of a home and the value to be repaid. This can be explained with an example- suppose; you have bought a home for £ 100,000 two years ago and have repaid £25,000 to the lender till now. If the market price of that house has now risen to £150,000 then the home equity will be the difference between the money left to pay the lender and the present market price, i.e., £75,000. This home equity, you have to keep as collateral for getting these loans.

These are also said to be the second mortgage as the collateral offered here is the equity of a property. The repayment term too is shorter than the first loan.

Home equity lines of credit are certain kind of loan that holds the greatest advantage of lower interest rates. Tax benefit is another reason for which people mostly prefers to go for these. Thus, the bad credit home equity loans are of good help and use to the borrowers with bad history. CCJs, arrears, late payment, defaults and bankruptcy are allowed here.



HOUSTON

Dark Magician asked:


I understand equity is value you have built up in your home by making loan payments but why is it required to refinance? Is it because lenders want to see you are in the process of paying off the loan instead of simply refinancing frequently?

Thanks

JOAN

Ken Charnly asked:


A home equity loan can be ideal if you need money for your education, paying your medical bills, or even for the renovation of your home. It is a loan in which the borrower makes use of the equity in his home as collateral against the money lent to him. There are two types of home equity home loans: the closed end home equity loans and the open end equity loans. 

The closed end home equity loan is more of a traditional loan. You can also call it a “second mortgage”. By virtue of the closed end home equity loan, the borrower receives the full loan amount at the time of the closing of the loan. The loan is then meant to be paid back by the borrower in monthly payments in fixed installments. The loan has to be paid back in full by a certain stipulated period of time, like 10 or 15 years.

The open end home equity loan is considered by people who desire flexibility in paying back the lender. In this type of home equity loan, the borrower gets a line of credit instead of the entire amount. The borrower can choose how much money he can borrow against the equity of his home. The borrower has the flexibility to choose the time in which he can borrow the money. These kinds of loans generally have a variable interest rate.

When you shop for a home equity loan, it is important to do enough research. Be wary of lenders who try to take advantage of you and give you a loan which you may not possibly be able to pay back.  It is better to pick a lender of repute or the one which a knowledgeable person recommends.



GRAHAM

Webmaster Home123 asked:


 

Home equity loans or lines of credit allows you to borrow money, using your home’s equity as collateral where equity is the difference between how much the home is worth and how much you owe on the mortgage. A home equity loan (or line of credit) is a second mortgage that lets you turn equity into cash, allowing you to spend it on home improvements, debt consolidation, college education or other expenses.

Advantages and Disadvantages of the home equity loans

Advantages: There are many other advantages of home equity loans. The loan payments on these loans are tax deductible. Home buyers can take bigger sum equity loans. These loans also carry a low rate of interest. But it’s best to heck the prevailing interest rates from many lenders and banks before you actually go in for a loan. It’s also important that the borrower check the credentials of the lenders before applying for a loan. They are many scam and con artists who can take away your home in lieu of giving you a home equity loan. The borrower also risks losing the home in case they default on the loan.

The two major advantages of borrowing with a home equity loan are lower interest rates and potential tax savings:

- The interest rate you will pay on the average home equity loan is generally lower than the interest rate you will pay on the average credit card or any other type of non-secured debt.

- For home equity loans, you can generally deduct the interest you pay. The interest you pay on credit cards and other types of personal loans is generally not tax-deductible.

Disadvantages:

Risk of losing home. If you can’t repay or refinance the loan, then you may be forced to sell or lose your home. Your home is the collateral for the loan. Being late or missing loan payments can trigger foreclosure within 60 to 90 days.

Rising interest rates. With a variable interest rate, most home loan rates change when the economy changes. This means your monthly payments can rise and fall. Be sure you know what the cap is on the loan’s interest rate. The cap sets how high your interest rate can increase each year as well as how much it can increase over the whole loan time period.

Fees. Lenders can charge a variety of fees including origination, application, and withdrawal fees. Be sure to ask about all possible fees.

The major disadvantage of a home equity loan is that you are using your house to get approved for the loan. For some people who have flawless credit this might not be a problem, because they can insure themselves that they will do whatever it takes to pay off their loan. However, instances have arisen where individuals have forgotten or were they are not financially able to pay for their loans. So at this point you’re wondering what happens if you cant pay your home equity loan? With all financial decisions come risk and the risk of losing your home wouldn’t be an option, especially if you have a family.

Home equity loans are best used for home improvements that will increase the value of your home. Some improvements, such as swimming pools, don’t usually increase the value upon resale. Others, such as additional bathrooms, living space, renovated or updated kitchens, etc., generally do increase the value of your home.

The bottom line is this: if your home is worth more than you owe on it, a home equity loan can be a great way to take advantage of this, but it can also get you into serious financial trouble, and should be used wisely. Why not use the equity in your home as part of your retirement fund instead of spending it on things that may not last?

Over the life of home loans - sometimes up to thirty years - your financial circumstances can change dramatically. Starting a family, changing jobs, children leaving home and many other factors can alter your financial circumstances over the term of the loan. A home loan that is right for you at the beginning has the potential to become the worse mistake you ever made.

Refinancing can be useful and financially rewarding but it can also carry risks. It takes time and costs money, so before you decide to change to another lender, ask yourself if it is really the right thing for you.

Are you happy with your existing lender? Have they been professional and helpful in all the dealings you’ve had with them? Are you happy with your existing loan? Is the interest rate comparable to other lenders? Could you use some extra features offered with other products?

Has your financial situation changed? Maybe you’ve started a new job or become unemployed.



HARLAN

Darn asked:


I am trying to refinance my home equity loan. Each time I try to call a lender, they all want to run my credit report which I understand because that is the only way to check my FICO, debt ratio and etc. But, won’t it affect my credit score? I had 4 lenders checked my credit report already. Pls help.

THURMAN

Ajeet Khurana asked:


Did your neighbor just update his or her home and when you asked how they could afford it they stated that they did it all with a home equity loan? If so, you may be wondering exactly what a home equity loan is. Do not worry, many people are like you, they have heard the term and they think they have a general understanding but they just are not quite sure. A home equity loan is essentially a loan where the borrower uses the equity in their home as collateral.

More About Home Equity Loans

Home equity loans are not for everyone, but if you need cash for major home repairs, to update your home, to pay medical bills, or even pay for a college education this is a great option. A home equity loan will effectively create a lien again the home, which means that you cannot sell the home without paying off the loan first. When you have this type of loan again your home you are reducing the actual equity in the home because you have borrowed against it.

Home equity loans are often referred to as HEL and they are quite common today. Many homeowners use them to pay unexpected bills or simply to make their home a more comfortable one to live in. If you have a home and you have a decent credit history chances are that you will receive a lot of offers to take one of these loans out. While this type of loan should never be used for play money it is a great option to have when you do need funds on short notice.

To be approved for a home equity loan you will need to have a good to outstanding credit history. You will also be required by most lenders to home a reasonable income to debt ratio, which means that you can afford to pay your bills based on the amount of money that you make and the amount of debt that you are already paying on. When you do apply for a home equity loan you will find that there are two different varieties, which are closed end and open-end home equity loans.

Both the open ended and closed end home equity loans are often referred to as second mortgages. The reason that they are called second mortgages is because the loans are secured with the property just like your typical mortgage is. While they are called second mortgages home equity loans do not usually have as long a term as the traditional mortgage, though there are exception.

The nice thing about these loans is that you may be able to deduct the interest on the income tax, offsetting what you are spending on interest. Home equity loans really do come in useful in a lot of situations, though they need to be carefully considered because they are not without risk since they are secured against your home and if you do not pay than action can be taken against your home.



JAYSON

Dina Wilson asked:


Suppose you have obtained a first mortgage worth ₤150,000 on your property. You have paid ₤70,000 in last 5 years. Your home value has also increased to ₤300,000 in these 5 years. So your home equity is ₤1, 50,000 (₤300,000 - ₤70,000). Now if you take a home loan worth ₤2, 30,000 keeping the home equity as security for the debt, then such loans are called home equity loans.

Equity is the difference between how much the home is worth and how much you owe on the mortgage if you have more than one on the property. Home equity loans are second mortgages that let you turn equity into cash, allowing you to spend it on home renovation and improvements, business extension, availing children higher education, debt consolidation, or other expenses.

There are many benefits of home equity loans. Followings are some:

•Low interest rate home equity loan

•Borrow up to 125% of your home value (amount ranges ₤3, 000-₤75, 000)

•Flexible repayment term (term of 5to 25 years)

•Make any use of the loan amount

•Free online advice for home equity loans

•Lower interest rates

Home equity loans are quite useful, and have several advantages over other types of loans, such as credit card loans or more traditional secured loans. The biggest advantage is that the interest on home equity loans is tax deductible. The interest rates on home equity loans are already pretty competitive, but the addition of the tax deduction makes them pretty hard to beat.

Home equity loan is risk less loans. The lenders use the borrower’s home as collateral security. Home equity loans allow users to access funds depending upon the borrower’s requirements in varying amounts up to their credit limit.

For this cause, there are innumerable lenders present online. With the respective terms and conditions, these lenders are going in for alluring borrowers one way other. Availability of home equity loans online has made availing rather time-saving and instant at processing.



ANTWAN