"For man's greatest crime is to have been born."Pedro Calderon de la Barca
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A Second Mortgage Vs. A Home Equity Loan
If you own your home and need a loan for whatever reason you have probably considered a second mortgage or a home equity loan to help you pay your bills, buy a new car, or pay for some other investment. However, you probably don't know whether a second ...
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Home Equity Loans - How To Use Your Home's Equity To Consolidate Debt
If you've got a wallet full of credit cards, and monthly payments on them that total more than 25% of your monthly income, chances are that you've considered debt consolidation loans or some other means of taming your credit card debt. But did you know ...
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A home equity line of credit is a revolving credit line, using your home as collateral. A home is often the greatest asset most people have and many homeowners make use of of a home equity line of credit (HELOC) for major purposes such as home improvements, education, medical bills and paying off other debts.
There's also an excellent program available now that actually shows you how to save thousands on your mortgage - and even leverage a HELOC to potentially build wealth. You can learn more about Make Your Home Make You Rich at http://www.usecreditwell.com
Once approved for a home equity line of credit, you will be assigned a particular credit limit based on the amount of equity available in your home. Most lenders determine the credit limit on a HELOC by establishing a percentage of your home's appraised value and subtracting the amount of balance owed for your existing current mortgage.
If your home has an appraised value of $350,000 and you owe $270,000 then may be offered a HELOC of up to $80,000; $350,000 minus $270,000.
Additional factors will determine the value of your credit limit. Lenders will consider your probable ability to pay by analyzing your income, other debts, credit history and financial responsibilities.
Almost all home equity line of credit plans are set for a fixed period. During this period, such as five to ten years, you are eligible to borrow money as long as it is within your credit limit. It is very similar to using a credit card, with some distinct advantages to you.
When the original period expires, you may renew the HELOC. However, some plans do not offer renewals and once the period has ended, you are not eligible to borrow any additional money. Other lenders allow repayment for an agreed fixed period.
Usually, the draw period is set at five to ten years with a repayment period of ten to fifteen years. However, each lender could set its own draw and repayment periods. The most common draw periods are nine years and six months. The most common repayment period is for twenty years.
Once you have been approved for a home equity line of credit, you have the benefit of borrowing up to your limit and utilizing the equity in your home at any time. Most HELOC accounts come with special checks and plans allow you use credit cards or other methods to draw on the line of credit.
Some plans set limitations on the usage of the home equity line of credit. Most plans allow you to get the minimum amount for each transaction and maintain a minimum outstanding balance. Some plans also oblige you to draw up your first advance as soon as the line of credit is set up.
Like any other investment, there are costs to establish and maintain a home equity line of credit. First, there could be fees for property appraisals to determine the market value of your home. Second, some lenders may require an application fee that generally cannot be refunded if your application is denied. If you shop around, however, you can usually obtain a HELOC with no upfront fees - aside from the property appraisal.
In addition, you may be required to pay for a title search, attorney fees, title and property insurance, additional taxes, and preparation and filing of mortgages.
Once you have received your home equity line of credit, there may be other fees during the entire plan period. These include maintenance or membership fees and transaction fees for every withdrawal.
Although there may be some upfront fees involved with establishing your HELOC; your annual percentage rate will be significantly lower than any other type of credit. Plus, you can utilize the valuable equity built up in your home now - without the need to refinance or sell your home.
The interest savings should allow you to offset all the costs of maintaining and establishing the home equity line of credit. Sometimes, the lenders waive some or even most of the costs for closing the deal.
About the author:
Why not learn how to make your home make you rich? Visit http://www.UseCreditWell.com and learn how to use the equity in your home to create a dynamic financial future.
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HELOC, Car Loan Delinquencies At Record HighsU.S. News & World Report, DC - 5 hours agoIn the latest sign that consumers are under financial stress, indirect auto loan and home equity lines of credit (HELOC) delinquencies reached their highest ... |
The Dutch diseaseMotley Fool - Dec 31, 2008In America's case, it would be HELOC money and dirt-cheap loans from China that did the same thing to us that oil did to the Dutch. ... |
Home DepotExaminer.com - Jan 2, 2009... thing this downturn has taught us: you need liquidity and you can almost always borrow that money back if you need it through a 2nd mortgage or HELOC. ... |
Fed Cuts Rates: Here's What's NextSmartmoney.com - Dec 16, 2008Typically when rates are cut, rates one home equity lines of credit, or HELOCs, fall too. However, this time, the impact on HELOC rates will be much more ... |
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