It really feels great to have a house of your own. It not only gets added up in your assets but can also become an excellent source of credit when you need it the most. In other words, your home can turn out to be a great source of money when you fall in urgent need of funds. This has been made possible with the help of a home equity loan.
Home equity is the ownership value tied up in a home or a property which estimates the current market value of the house. This amount does not include any remaining mortgage payments. Thus, home equity is calculated by deducting the unpaid balance of the mortgage and any outstanding debt over the home from the home’s actual market value.
The home loans are categorized in two segments- the standard Home Equity Loans and the home equity line of credit. The standard home equity loan offers a debtor with a particular amount of money that has a fixed interest rate and payments. These loans have to be paid in a fixed time period. These loans offer a larger loan amount as its borrowers are allowed to re-borrow the loan amount that they had already paid in the past.
A home equity loan is always secured in nature as it requires you to pledge your homes’ equity as collateral. These loans offer low interest rate, help you become debt free, allow you to borrow up to 100% of your home’s value and the loan payments usually come with certain tax advantages.
The value of equity can be used for various purposes. These include availing loan and to invest for getting a high interest rate. Borrowers may use this loan amount for making home improvements, for college tuition or for things like investing in business ventures like purchasing additional property. Thus, a home equity loan is an alluring option for all those homeowners who require quick cash for any of their urgent needs.
By: George Kane
Posts Tagged ‘Home Loans’
Home Equity Loans: a Flexible Option to Cater All Your Needs
November 5th, 2009Home Equity Loan
September 14th, 2009A loan that is guaranteed by your home or secured by the equity in a home is called Home Equity Loan. Home loans are secured loans, which is a lower risk for the lender. This means that you have more chance of getting the loan you want, and you will find far lower rate of interest rates attached to these simply because they are secured.
Home Equity Loan is also considered as a second mortgage or Equity loan. If used wisely, a home equity loan can help people pay off their huge interest rates, non tax-deductible consumer debt or meet other short term needs such as payment on a remodeling project.
Benefits of a home equity loan
• Home Equity loan can be the best option if you need to repair or reconstruct your home for debt consolidation or for medical or educational expenses.
• It can be used for home improvement
• It can be used for investment in other real estate
• It can be used to refinance your other debt
• It can be used for debt consolidation
• It can be used for some major purchases and expenses
• It can be used for auto or boat loans
• It can be used to get rid of credit card debts
• It can be used to pay off your medical debt
• It can be used to meet your educational loans
• It can be used to meet your wedding expenses
• It can also be used to meet your vacation expenses
Types of Home Equity Loans
There are two different types of home equity loans
1. Standard home equity loan
2. Home Equity line of credit
You’ve worked hard to increase your home’s value, and you can put that value to work with a Home Equity Loan or a Home Equity Line of Credit.
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