Home Equity Loans
Lenders Offer Competitive Rates and Highly Personalized Service
A home equity loan, also known as a second mortgage, is a great way to borrow money against the value of your home to pay off debt, including high interest credit card debt. Pay for school, buy a new vehicle, make home improvements or take that long overdue vacation with a home equity loan.
A home equity loan is a secure loan since the borrowers’ house serves as collateral. Those who do not have good credit often choose home equity loans for borrowing large amounts of money. Why? Lenders are much more likely to grant the large loan because they know you can’t disappear with your house should you default on the loan. Also, lenders are aware nobody wants to jeopardize loosing the roof over their head. If you have built up equity in your home and want to use it to your advantage, a home equity loan can be a great source for funds.
Home Equity Loans offer a fixed amount of money, up to 100 percent of the equity you have built up in your home. Some lenders will allow you to borrow up to 125 percent of the value of your home.
To qualify for a home equity loan you need to provide proof of income and home ownership. You will normally need to show that 20 percent of the value of your home is paid off.
An appraisal is usually required to qualify for a home improvement loan.
Advantages of a Home Equity Loan
The advantages of home equity loans are many, including they typically offer a lower interest rate, are easy to qualify for (even if you have bad credit), are often tax deductible and offer large amounts of money.
The term of the home equity loan can be as short as a year or as long as 30 years. Closing costs are also much lower than for a first mortgage. You also receive the total loan amount in one lump sum payment. This offers a huge advantage if the money is being used for large purchases, such as buying a vehicle.
The main disadvantage to a home equity loan is you can lose your home. Should you default on the loan or can’t make your scheduled monthly payments, the collateral (your house) which is being used to secure the loan can be seized. As with considering any type of loan, make sure you are fully aware of how it is going to impact you financially long after you have received the loan.
A home equity line of credit is similar to a credit card. You are given a pre-determined credit limit to use as needed. However, unlike a typical credit card, it is secured by the equity in your home. You only pay interest on the amount you use. Payments revolve back into your credit line as available funds. The rate adjusts annually, which is determined by the prime rate.
You will usually receive an attractive interest rate with a home equity line of credit since the equity you have built up in your home will serve as collateral.
A second mortgage can offer an upfront lump-sum of money. This may be advantageous to your situation since a second mortgage does not require you to write checks from an account. Another nice feature a second mortgage offers is a fixed interest rate, as well as fixed monthly payment amounts.
Keep in mind there are other methods to borrow money if you decide a home equity line of credit or loan is not for you. The lenders on this site offer a variety of flexible lending programs that can be tailored made to suit your financial situation.
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