If you are interested in a Home Equity Loan then it is smart to read this article about the Home Equity Loan Basics and know some key items before you sign on the dotted line. To begin with, there are two different types of home equity loans. The first type is a home equity loan where you borrow a certain amount of money and agree to pay it over a defined term from 10-30 years. Interest rates in these cases are normally fixed and the payment should stay the same over the course of the loan. The other home equity loan is a home equity line of credit or a HELOC for short. These loans are where a lender gives you a line of credit against your home and a specified cap to which you can borrow against. The characteristics are mostly like a credit card in that you will have a minimum monthly interest payment, but paying down the principal of the loan isn’t required until the “draw period” has expired which is normally 10 years. After the 10 years, you are required to pay back principal and interest with an adjusted payment. It is also worth noting that HELOCs normally have variable interest rates that are tied to the prime rate so if there is volatility, you can see your payment spike at any time.
If you are in the market for a home equity loan, be prepared to be well qualified before most lending institutions will even consider giving you a loan. In most cases you are going to need 700+ FICO credit score and the ceiling for most home equity loans is only borrowing up to 80% of the property value between first mortgage and the new loan or line of credit. Gone are the days of borrowing up to 100% of your home value as this is what contributed to the Great Recession of 2008.
If there is one you need to know about Home Equity Loan Basics it is that you need to make sure you are responsible with your spending and what exactly you are going to be using the money for. There aren’t any restrictions to what you can use the money for but it is always good to have a plan as to how you will use the funds. Thinking about this loan as an extra payday can come back to haunt you. Some examples of what to do with this money could be using it to pay off higher interest credit cards, making improvements to your home, or paying off other bills like medicals bills that may be in collection. There is one thing to think about when paying off credit cards and it is to not rack up credit card debt again or you will be in the same spot as you were before. Also, now your debt is attached to your home instead of on an unsecured line through the credit card company. So if you fall behind on paying this debt back, your house could be in jeopardy.
If you are familiar with the Home Equity Loan Basics there is no reason why you shouldn’t get one and I am the right guy to make sure you are going about this the right way. I can start working on your home equity loan today and get it closed ASAP. You can call me any time at 888-900-1020 or by visiting my website www.loanconsultants.org.