Chicago home equity loans are the type of loans where the borrower uses the equity in his Chicago home as collateral. You can lose the home and be forced to move out if you don’t repay the debt. Such loans are often used by families in need of financing help to make major home repairs, pay medical bills or college tuitions. Chicago home equity loans create a lien against the borrower’s house. Equity is the difference between how much the home is worth and how much you owe on the mortgage (or mortgages, if you have more than one on the property). Such loans require an excellent credit score and reasonable loan-to-value ratios. An individual can apply for an equity loan, no matter the type of home he has. It can be a condo, house, apartment, or townhouse.
The maximum amount that you can borrow through a home equity loan depends on your credit score, monthly income, and the appraised value of the collateral, among others. It is possible to borrow up to 100% of the appraised value of the home. Chicago home equity loans can be of two types, closed- and open-end. Closed-end home equity loans generally have fixed rates and can be amortized for periods usually up to 15 years. The open-end loans, also known as HELOC (home equity line of credit) loans, are at a variable interest rate, but here the borrower chooses when and how often to borrow against the equity of the property, with the lender setting an initial limit to the credit line.
But when comparing the two, keep in mind that you cannot simply compare the Annual Percentage Rate (APR) for a loan with the APR for a home equity loan because the APRs are figured differently. The APR for a regular loan takes into account the interest rate charged plus points and other finance charges. The APR for a home equity line is based on the periodic interest rate alone. It does not include points or other charges.
Here are the steps you should follow when considering a home equity loan in Chicago:
1) Check your options – home equity loans are not the only method of financing. Remember, if you decide to get a home equity loan and can’t make the payments, the lender may foreclose and you would lose your home.
2) Do the research – if you are keen on getting such a loan, then talk with several lenders, including at least one bank or credit union in your community. Compare their offers. Comparing loan plans can help you get a better deal. Beware of loan terms and conditions that may mean higher costs for you. Keep in mind the following parameters:
-Can you afford the interest rate and monthly payments?
-The period of the loan, or how long you have to pay it back
-Check the penalties for late or missed payments
3) Double check – think twice before signing the contract. Have an attorney review the loan papers and make sure the terms are the same ones you agreed on.
By: Dave Badge
Posts Tagged ‘Equity Line Of Credit’
Chicago Home Equity Loans
December 27th, 2009Home Equity Loan Facts
December 26th, 2009A home equity loan is a special type of loan that is used by homeowners who wish to use their equity as collateral. It may be necessary for a family to obtain a home equity loan for things such as medical bills, college costs, or house repairs. In a nutshell, a home equity loan is basically a lien that is placed on the property. Obtaining a home equity loan requires the customer to have good credit, and they should be a low risk borrower. Home equity loans are divided into two types, and these are open end and close end. A home equity loan may also be referred to as being a second mortgage.
When compared to traditional mortgages, home equity loans tend to be shorter in length. In places like the US, homeowners may be able to deduct the interest the earn on their income taxes. With the closed end home equity loan, the homeowner will be given a set amount of money at the closing, and they will not be able to borrow any more money. The amount of money that they are given will be determined by their credit score, salary, and the value of the home. It is not uncommon for a homeowner to borrow 100 percent of the value of the house, and some lenders will go beyond 100 percent in a process that is called over equity. » Read more: Home Equity Loan Facts
When Is The Best Time For A Home Equity Loan?
December 26th, 2009Americans have been tapping their equity from their homes for decades by taking out home equity loans, equity lines of credit or refinancing. When I was child growing up in the sixties, it was inappropriate for neighbors to talk about a second mortgage, because it meant that you mismanaged your money and the implications were always centered on financial trouble. Times have changed, because over 60% of homes purchased today include a second mortgage in the sales transaction.
If you are a homeowner, you have most likely received solicitations all the time to apply for a home equity loan or refinancing your second mortgage. Home equity loans can be efficient tools for financing home improvements and consolidating credit card debt. Home equity lines of credit can improve cash flow, and provide flexibility for investing. Having an equity line of credit secured to your property, can provide a safety net of cash reserves for family emergencies, or sudden investment opportunities. We suggest getting approved for a home equity loan when you need it least. What we mean by that is, “Don’t wait until you are late on your bills or when a close family member needs your help.” Rarely in life can you plan for investment opportunities, financial obstacles. Remember that mortgage lenders and banks can always get you a loan when you need it. For example, If you are late on your credit card bills and the banks report you late to the credit bureaus, there is a good chance that your credit scores have dropped, and you might not qualify for the home equity loan you need. The same is true, for if you stumble across a worthy investment. Typically investments have a small window of opportunity, and by the time you get approved for a second mortgage, and actually close escrow, the opportunity may be gone. » Read more: When Is The Best Time For A Home Equity Loan?
