More about Home Equity Loans
A Home Equity Loan is a secured loan where your home is taken as collateral. Interest rates for home equity loans are lower than for other loans since lenders consider them safer.
Equity is calculated by subtracting the amount of loan outstanding from the current home value. For example if your home is valued at $200,000 and you have an outstanding balance of $30,000, then you have equity of $170,000. That is if you have no lienn or other outstanding debts against the home.
How big an equity loan can I borrow?
This depends on many factors. Some lenders will lend upto 105% of your home's value if your credit is excellent. Some states limit the value of your home that you can borrow as a loan, for example Texas.
Costs involved with Home Equity Loans
Some lenders will charge fees(closing costs) in addition to interest charges on the loans. Other fees include prepaid interests, also known as points.
Tips on How to shop for Home Equity Loans
Comparison shop before commiting to any loan agreement. Check out several lenders and compare interest rates before commiting. Request several quotes before making a decision.
Pay close attention to all fees. Some fees may not be included in the annula percentage rate.
Negotiate with lenders and try to get the best rate possible.
Home Equity Line Donts's
Agree to a home equity loan if you don't have enough income to make the monthly payments.
Sign any document you haven't read or any document that has blank spaces to be filled in after you sign.
Let anyone pressure you into signing any document.
Agree to a loan that includes credit insurance or extra products you don't want.
Don’t deal with door-to-door salespersons or telephone solicitors offering to provide you a home equity loan.
Deed your property to anyone. First consult an
