Welcome to Home Mortgage
Refinance Home Mortgage Rate Loan Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
You may also listen to this article by using the following controls.
A Home Equity Loan Is It For You?
from: Felicity WalkerHome equity loans are often touted as being the solution to so many things giving you access to money for home repairs or improvements, a way to consolidate debt, finance a sudden family emergency, or even as a way to start an investment portfolio. Theres a lot to think about, though, before you go and sign up for the first home equity loan you see.
A home equity loan is like a second mortgage on your home. If your home is currently worth $130,000, and you have a mortgage against it for $70,000, then you have $60,000 of equity available. Some home equity loans may allow you to borrow up to 80% of your homes value, others may go higher in special circumstances. In this example, you would be able to borrow another $34,000 as a home equity loan and still have only borrowed 80%.
So the first step is to get a reasonably good idea of what your home is worth on the market. Your friendly realtor may help with this, but be aware that sometimes they can inflate the value in the hope of getting your business. You can also look at what price similar houses close by have sold for. Or you can pay a qualified valuer to assess your home.
Now you have a starting figure, you can work out how much equity you have in your home. The other important figure to work out is how much you need for whatever purpose you have in mind. Hopefully that works out to be less than the equity available! Its even better if its less than 80% of the available equity.
At this point its important not to get carried away. It can be all too easy to say, well, I have $50,000 available and I really only need $30,000 to complete the repairs, so why not borrow $40,000 and blow the rest on a holiday? Remember the more you borrow, the more it will cost you in repayments. Its very easy to borrow too much, only to find yourself struggling to meet the payments and maybe even losing your home.
You also need to decide what type of home equity loan you want. There are two main types a closed end loan and a line of credit. A closed end loan is basically the same as a standard home mortgage you borrow the amount for a set period of time, and make payments over time to gradually pay off the balance.
A line of credit, on the other hand, is like having a credit card with a big limit. Some banks will require you to make minimum payments each month, others only require payments if youre at your limit. Either way, the loan will only be for a set period of time, and at the end of that you will either have to extend the time period or refinance the loan with another lender. This type of facility can be useful if youre disciplined with your money, but if youre the type of person whose credits cards are always at their limits, it may not be a good idea at all to have ready access to such a large amount of credit.
Next, you need to work out how long you want to borrow the money for. This will vary depending on how much money you are borrowing, the type of home equity loan and how much you can afford to pay. There are lots of good mortgage calculators online that can help you to work this out. If borrowing the money over 5 years for a closed end loan means you wont be able to meet the payments, then see if spreading the loan over 10 years becomes more affordable for you. You will pay more in the long run, but at least you wont default on your loan.
When you know what you want, its time to go and find it! It may be worth starting with banks recommended to you by friends and family at least theyll be able to give feedback on their experiences. You can also shop around online, looking for the best deal.
Finally, when you have chosen the loan you want and are ready to proceed, do two more things. Firstly, check for fees. Banks are aware of the need to be competitive, and will often avoid charging up front fees for that reason. However its amazing what can be hidden in the fine print of a contract. So read any loan documents thoroughly before signing. If you can, get the contract explained to you by your legal advisor.
Home equity loans can be a wonderful tool when used correctly. Do your homework first, find the loan that best matches what you want, and go for it. Just make sure you dont over extend yourself or sign documents that will give you nightmares forever.
Copyright Felicity Walker 2005
About the Author
Investing and finance are two passions of the author. To find out more, check out http://www.homeequityloanzonecentral.com">http://www.homeequityloanzonecentral.com">http://www.homeequityloanzonecentral.com for more information.
Refinance Home Mortgage Rate Loan News
Mortgage rates stay at record low - Cherry Hill Courier Post
Mortgage rates stay at record low Cherry Hill Courier Post WASHINGTON — The average rate on the 30-year fixed mortgage stayed at a record low this week, providing some added incentive for those looking to buy a home or refinance. Mortgage buyer Freddie Mac says the rate on the 30-year loan was unchanged at ... |
Senator Boxer Faults BofA for Mortgage-Refinancing Delays of Up to 90 Days - Bloomberg
 Bloomberg | Senator Boxer Faults BofA for Mortgage-Refinancing Delays of Up to 90 Days Bloomberg “Delays could prevent borrowers from taking advantage of today's historically low interest rates and improvements recently made to the Home Affordable Refinance Program,” the California Democrat wrote in a letter today to Chief Executive Officer Brian ... BofA Faulted by U.S. Senator Boxer for Refinancing Delays HARP Refi May Delay PMI Cancellation As Mortgage Refinancings Surge, Banks Struggle |
Loan Terms Made to Order - New York Times
 New York Times | Loan Terms Made to Order New York Times Lenders usually offer home loans in five-year increments, he said. JPMorgan Chase, for example, lists on its Web site fixed-rate mortgages in 10-, 15-, 20-, 25-, 30 and 40-year terms. The shorter terms are especially valuable to people refinancing ... |
Landmark settlement with mortgage lenders provides relief for some struggling ... - MiamiHerald.com
 USA TODAY | Landmark settlement with mortgage lenders provides relief for some struggling ... MiamiHerald.com ... mortgage may see their loans shrink by about $20000, part of a loan modification effort to keep people in their homes. • Those current on their mortgage payments but who are underwater can expect an option to refinance their loan at la lower rate. Foreclosures to Climb Before Bank Deal Helps US Housing Market $26B Foreclosure Settlement Reached Questions and answers on the mortgage settlement |
Fitch: Low Rates Providing Limited Help to Weakest US Mortgage Borrowers - MarketWatch (press release)
Fitch: Low Rates Providing Limited Help to Weakest US Mortgage Borrowers MarketWatch (press release) Since 2009, approximately 40% of all Prime RMBS borrowers have been able to refinance into lower-rate loans. And although a meaningful portion of the remaining Prime borrowers have been locked out of refinancing due to negative equity, an increasing ... |
The $26 billion mortgage settlement: who gets help and how - Christian Science Monitor
 Christian Science Monitor | The $26 billion mortgage settlement: who gets help and how Christian Science Monitor The main thrust of the $26 billion mortgage settlement is to help homeowners whose homes are 'under water.' Refinancing a reduced loan will lower payments and help people facing foreclosure stay in their homes. By Ron Scherer, Staff writer / February 9 ... President Announces Homeowners Bill of Rights Will $26 billion mortgage settlement really help enough Americans? Hub housing activists not satisfied with $25B deal |
Mortgage Refinance Rates: 15 Year Refinance Mortgage Rates at 3.29% - MonitorBankRates.com
 Deseret News | Mortgage Refinance Rates: 15 Year Refinance Mortgage Rates at 3.29% MonitorBankRates.com Mortgage refinance rates on 30 year conforming home loans are averaging 3.98%, unchanged from yesterday's average 30 year mortgage refinance rate. Mortgage refinance rates today on 15 year home mortgage loans are averaging 3.29%, down from yesterday's ... Mortgage rates hit a new low: 30-year fixed at 3.87% Mortgage rates probe new lows Rate on 30-year mortgage falls to record 3.87 pct. |