A home is a place that symbolizes freedom and liberty. Having a personal home is one thing that every one desires. But only a lucky few could afford a personal home. The exorbitant prices of real estate and constructed property make the people apprehensive.
And succumbing to such apprehensions, lots of people opt for, and stay for life in, rental apartments. A rented apartment can never be yours and the feeling of owning a house and enjoying its possession makes you a king.
Thanks to home loans, owning a house is not only affordable but lucrative too. After enjoying the comforts of home, repairs and maintenance expenses might trouble you no end. It’s here that home equity loans appear as olive branch. Home equity loans are given based on the net worth of your home, i. e. , the actual value of home minus any debt outstanding against home.
You can shop for best home equity loan rates from various public sector and private sector banks. The interest rates may vary but the tough competition in banking segment means very marginal difference in the ROI. If you seek a home loan advice from a professional, he will surely suggest you to go for fixed rate home equity loan due to certainty of liability you are incurring.
Repayment of home equity loans is generally quite cool on your pocket. Easy installment plans with the option of one-time settlement will certainly lure you no end. These installments also come with rebates and concessions in your annual income tax. Almost every country has a tax structure that is tailored to be friendly with the home loan structure.
And who would not like to save some dollars in the process of getting instant money to satisfy your immediate requirements? So, if you are planning to spend some money and save tax on your expenditure, home equity loan is not such a bad idea.
Posts Tagged ‘Home Repairs’
Get Tax-wise – Opt for Home Equity Loans
December 17th, 2009Home Equity Loans-Lower Rates, Smaller Payments, A Better Option
November 10th, 2009Home equity loans are sometimes used for consolidating consumer debt or covering a large expense such as a wedding, college expenses, or home repairs to your existing home. Home equity loans are great in that they use the collateral already invested in your home to secure the loan, allowing you to get a better rate out of the deal and make smaller payments than you would to a credit card or even on a personal loan. Home equity loans are desirable to borrowers because they oftentimes have a lower interest rate, they are easier to qualify for even if you have bad credit and your monthly payments on a home equity loan may be tax deductible.
In the past, home equity loans were more often than not used for home upgrades that would raise the value of your home. Nevertheless, these loans have become a feasible option for large, non-home improvement related purchases or even for consolidating outstanding debts into one monthly payment at an affordable interest rate. Even as home equity loans are a great means to release extra cash which is tied up in your home, borrowers must be fully aware that they are using their home as collateral. If a situation arises and their loan requirements aren’t met, they could lose their house.
Lenders consider several factors such as your credit history, ability to repay the loan, and your homes equity (noted above) when deciding how much money to lend. Although the chances of your approving for an equity loan may increase, you’re not going to get a complete pass on the “process”. Lenders will still have to review the credit history of potential borrowers to settle on their credit worthiness. Lenders will still have to review the credit history of potential borrowers to settle on their credit worthiness. Lenders will still have to review the credit history of potential borrowers to settle on their credit worthiness.
So how much can you get? The amount of your loan is tied to the equity in your home with is simply determined by subtracting the amount owed on the home from the current market value. Equity loans enable homeowners to borrow money against their home’s calculated value. The “equity” merely refers to the cash value that has grown in your house because you have been making your monthly payments over time.
Equity loans, secured by real estate, are normally deemed safer by lenders. Because of this your interest rates are likely lower than credit card rates or even consumer loans. Additionally, regardless of the rate, the interest on debt secured by the mortgage or lien on your personal residence is commonly tax-deductible. Please consult your accountant for more detailed information. Home equity loans are, essentially, fixed rate home loans that enable you to take advantage of the money you’ve already invested in your home to finance larger debts at a lower interest rate than most revolving credit options. Home equity lending, often referred to as a second mortgage or borrowing against your existing home, can open up a lot of avenues as a funding source for a current homeowner..
When all is said and done, home equity loans are a great option if you are confident in your ability to pay them off. Because they normally have a lower interest rate, are less difficult to qualify for (even with poor credit) and the interest may be tax deductible, home equity loans are a great alternative for homeowners. Like anything else however, buyer beware. Less reputable lenders frequently target people in vulnerable circumstances with troubled credit by suggesting what appears to be an easy solution. Hidden fees and confusing rate calculations can make a bad situation get worse.
By: Albert Alexander
Home Equity Loan Vs. Home Equity Line of Credit
October 29th, 2009The reasons to consider a second mortgage are as varied as the programs available to you once you make the decision to tap into your home equity. Some popular reasons include college tuition, bill consolidation, health expenses, and home repairs. When it comes to borrowing money, these types of loans are favored for a number of
reasons, not the least of which is the tax deductibility of all the interest paid on an equity loan. Before you start shopping around, however, you should decide whether you want a closed-end second mortgage or a home equity line of credit (HELOC).
A closed-end second, also known as a home equity loan, refers to a second mortgage that is structured in a very similar way to your first. To borrow using a home equity loan, or closed-end second, you make a one-time choice on the amount you would like to borrow, close on the loan, and receive a check for the amount you’ve chosen. You will have regular payments structured over a period of years, and upon completion of those payments, your home equity loan will be paid in full. If you decide later that you would like to draw additional funds, you will need to arrange for an additional loan with additional closing costs. However, the closed-end second carries a fixed rate that will never go up and offers a straightforward plan for paying the money back.
A HELOC, on the other hand, is a line of credit from which you can withdraw money again and again. In many ways, a HELOC is just like a credit card, but the interest you pay is tax-deductible. You will close on a HELOC only one time, but if you decide after a few months that you need to withdraw additional money, you will be able to do so up to the value of the loan. That is to say, if you close on a HELOC for $60,000 and over a period of time pay back $13,000 toward the principal, that $13,000 is available to be drawn again at any time. You will continue to make payments toward what you owe just as you would on a closed-end second; however, the full amount of the loan is always available to be drawn on, as long as the amount you owe and the amount you borrow do not exceed the total amount of the original HELOC.
Whether a closed-end second mortgage or a HELOC is right for you is something you, your loan officer, and / or your financial planner must decide. If you are relatively sure that you will need to borrow against your equity only one time in the next several years, a closed-end second offers the fixed rate and regular amortized payment schedule that ensures you know both how much your payment will be and how long it will take you to pay off the loan. This kind of assurance can be particularly useful if you don’t trust yourself to spend wisely, or if you tend to buy impulsively and don’t want the option of drawing out additional funds.
A HELOC can be most useful if you are taking on a project, such as home repair, that has the potential of unforeseen expenses. A HELOC offers you the flexibility to borrow again and again. You may even be able to secure a HELOC that carries a low interest-only payment allowing you to borrow more and still have a manageable payment amount each month. Whichever you choose, drawing against the equity in your home is sure to save you money on the interest you’re paying for your purchase power, and as always, the interest you pay on any type of home mortgage is tax-deductible, offering an additional incentive.
Consult your loan officer or financial planner to decide whether a closed-end second mortgage or a HELOC would best suit your needs. Once you’ve made this first decision, you’ll be well on your way to finding the right equity loan for you.
For more articles on Home Equity Line of Credit, visit: http://www.bills.com/home-equity-line/
By: justin narin
