When you own a home, it is quite possible that you are going
to need financing for something else down the road – be it a new car or
a debt consolidation or another expense. Lucky for you, you have a financial
source right over your head! Home equity loans can help provide you the
money you need for other expenses. Here is some information to help you
figure out what home equity loans are all about.
You can save money in the
long run by taking time to inform yourself on the loan process and the terms associated
with it. It will be easier for you to compare lenders and know that you
are getting the best rates and offers when you are able to understand all of the
Start by understanding some of the terms that are bound to come
up during your home equity loan research. Collateral is property that you use
as a guarantee to the lender that they will get their money back. If you
default on the loan, the lender has a legal claim to that property to resell it
to recoup their losses. With home equity loans, your house is your collateral.
Equity is the difference between what your home is worth should you sell it and
how much you still owe on the mortgage. For instance, if your home is worth
$200,000 and you owe $150,000 to the mortgage company, the equity would be $50,000.
With home equity loans, you can take that money out as a second mortgage and use
it to take care of other expenses. These loans are often scheduled to be
repaid back over a shorter amount of time than your first mortgage.
the difference between home equity loans and home equity lines of credit is also
helpful. A home equity loan is a one-time total amount received that is paid off
over a set amount of time with set payments each month. You can only take
the money out once. Home equity lines of credit are different in that they
work more like a credit card, where you can borrow a set amount of money up to
the life of the loan as you need it. As you pay off the amount borrowed
you can take it out again, same as you would with a credit card.
for home equity loans you will want to do some research to find the loan that
is best for you. Shopping online is often an easy way to do this, and there
are distinct advantages to you. One of the first things to look into when investigating
loans is the interest rate and the repayment options and loan terms. By
shopping online, you have the advantage of looking into several lenders simultaneously
to find the best deal, lowest interest rates, and most flexible repayment options.
Applying online is often easier since it can be done from home at the time of
day that works best for you, instead of having to deal with inconvenient bank
hours. Paperwork may also be less since lenders have streamlined the process.