What is Home Equity Loan Modification?

Home equity loan modification is a change in which you have an option to modify your mortgage if you are behind and having difficulty in your payments. This is the loan type wherein the one who borrowed will use the equity in their homes as collateral. This will be sometimes a useful element to facilitate major repairs in the home, college education or medically related bills.This type of loan generates a lien or a security interest against the house of the borrower and the actual home equity will be reduced. This is usually referred to as mortgages because the value of the property is secured against it; just the same as a traditional mortgage. Also, it can be possible to deduct one’s income tax from the home equity loan.The government is giving you options to avoid possible foreclosure in your costs; this is the home equity loan modification. First is to have your payment at your mortgage that is 31% more than your gross income which greatly includes your taxes, your insurances or homeowner dues that you might be paying. This will just show that you are really struggling with your payments. Second is when you use loan modification, this will make your mortgage be in much better shape than you can ever imagine.It will provide you with payments than you can afford and will make sure that you will never lead into foreclosure which in turn, will get back your credits and save your home. And the last thing you would do is to go online and start consulting. You will just fill out some forms about yourself and your status. It includes information about your home equity loan modification and later on, they will call you and give details to help you in saving your home.

Equity Loans For Homes

A house is the single biggest asset that most people have and for the majority of Americans their homes represent over 75% of their total assets. Many people see their home as a sign that they have made it financially.As you pay down your mortgage and as real estate price increase in your area, you increase your home’s equity. This is basically the amount of the house that you own free and clear without any encumbrances. This equity can be used as collateral to secure a monetary loan, called a home equity line of credit. This can be a great way to secure a loan for a low interest rate since the lender with have the assurance of a claim on your home if you do not repay the loan.A good way to increase the value of your home is to use your equity to take out a home improvement loan. This is a no lose situation. The money you take out in the form of a loan will go right back into the house, increasing the home’s value and thus your equity. The most lucrative improvements in a home are those made to the bathroom and the kitchen, but other improvements are also worth the investment. Check with an appraiser to find out what improvements will do the most to increase the value of your home.The amount of money you can take out in the form of a home equity loan is determined by a pretty standard formula. The lender will take a percentage of the homes appraised value. To determine the loan amount, they will subtract that percentage from the amount you still owe on your mortgage. If you have owned you home for a few years and have enjoyed a bit of appreciation, the loan amount can be quite substantial.The loan is not totally based on you equity and the home’s value. Factors such as your credit history, credit score and current employment status also play a part. Though you’ll still need a solid credit rating to get the best interest rate, your credit is not as important as it was when you initially secured the mortgage.These loans usually have a much shorter repayment period than your original mortgage. The most common repayment period is ten years. Once the period is up, you can often renew the line of credit for another period, depending on the current value of the home. If you were consistent in repaying the loan, your credit rating will have risen and a new line of credit can be secured for a lower rate.If your home needs a few improvements and you can afford to finance them yourself, you can slowly increase the value of the home. Once you have done all the little things you can do to improve the house, you can then take out the home equity loan to make bigger improvements. At this point you should have increased the home’s value and will be able to take out a larger line of credit.

Refinance Mortgage Home Equity Loan: Consolidate Your Mortgage and Home Equity Loan

If you are a homeowner carrying a home equity loan in addition to your mortgage, refinancing to one monthly payment could save you money. Consolidating these loans has the advantage of one lower monthly payment and you can even lock in a fixed interest rate. Here are several tips to help you refinance your primary mortgage and home equity loans without overpaying for the financing.Refinancing has many advantages for homeowners with multiple loans. Consolidating your primary mortgage and home equity line of credit will make your monthly budget easier to mange by providing you one lower monthly payment. Additionally, you will qualify for a lower interest rate on your new mortgage than the one you were paying on your home equity loan. Home equity loans come with higher interest rates than your primary mortgage because there is additional risk for the second lender. The home equity lender passes this risk on to the borrower in the form of higher interest rates.Refinancing is also not without risk. The main disadvantage of refinancing your mortgage is that you are starting your amortization all over again. At the beginning of your mortgage, most of your monthly payment is applied to interest and very little goes to repaying the loan principle. When refinancing your mortgage there is the additional risk of overpaying for the new mortgage loan. To avoid overpaying for the new mortgage it is important to shop around from a variety of mortgage lenders and brokers. When you compare loan offers be sure and compare all aspects of the loans, not just the interest rates. You can learn more about shopping for the most competitive loan offer by registering for a free mortgage guidebook.

Home Equity Loan Facts

A home equity loan is a special type of loan that is used by homeowners who wish to use their equity as collateral. It may be necessary for a family to obtain a home equity loan for things such as medical bills, college costs, or house repairs. In a nutshell, a home equity loan is basically a lien that is placed on the property. Obtaining a home equity loan requires the customer to have good credit, and they should be a low risk borrower. Home equity loans are divided into two types, and these are open end and close end. A home equity loan may also be referred to as being a second mortgage.When compared to traditional mortgages, home equity loans tend to be shorter in length. In places like the US, homeowners may be able to deduct the interest the earn on their income taxes. With the closed end home equity loan, the homeowner will be given a set amount of money at the closing, and they will not be able to borrow any more money. The amount of money that they are given will be determined by their credit score, salary, and the value of the home. It is not uncommon for a homeowner to borrow 100 percent of the value of the house, and some lenders will go beyond 100 percent in a process that is called over equity.Closed end home equity loans will often have rates that are fixed. In addition to this, the loan may be amortized for as long as 15 years. Once the term of the loan ends, the homeowner may need to pay what is called a balloon payment. To avoid the balloon payment, the homeowner will need to either pay more than the minimum payment each month or refinance the home equity loan. The open end home equity loan may also be called a home equity line of credit. With this loan, the homeowner can decide when they want to borrow money against the equity of the home.At first, the lender will set a limit on the credit line, and this limit will be dependent on many of the things that are used with closed end home equity loans. As with the closed end loan, it is possible for the homeowner to borrow 100% of the value of their home with open ended home equity loan. The length of these loans may be as long as 30 years. The interest rate for the home equity line of credit will be variable. The minimum payment that is made each month will be directly connected to the interest. The interest rate of both of these loans will typically be dependent on the prime rate.Home equity loans have a number of powerful advantages, and they are utilized by millions of consumers. Many people encounter situations where they need large sums of money, and they money that they have may be tied up in investments. Home equity loans are a great way for them to pay for these large expenses.

3 Ways To Erase Debt With a Home Equity Loan

Can you erase debt with a home equity loan or line of credit? Sort of. I am not suggesting that people go and take out a home equity loan to pay off debt. Because that is just taking on more debt to pay off debt. A no-win scenario. However, this is addressed more to the folks who already have a loan or line of credit and are not completely out of debt yet. So here are 3 ways to use a HELOC to get out of debt.1. Eliminate High Interest DebtUse the loan to pay off higher interest rate credit cards or loans. Most of these loans are at lower interest rates. Usually somewhere around 3% – 5%. If you have several thousands of dollars on a credit card that is at 15% then it makes sense to use the loan or line of credit to pay off the credit card. In fact if you have enough room on a HELOC to pay off other cards or loans then do it to take advantage of the lower rate and to consolidate multiple payments into one payment. Then accelerate paying off you home equity loan to get out of debt.2. Temporary Emergency FundIf you have $10,000 or $20,000 or more in a home equity loan or line of credit that is unused then do not use it and keep it as a backup emergency fund. Especially if you do not have the cash reserves yet for a true emergency fund. So while you are building up your real emergency fund keep the loan as a fall-back just in case anything like a job loss happens before you can build up a fully funded emergency fund of 3 to 6 months. In addition with the vastly lower interest rates on HELOC’s it makes sense to use it temporarily as an emergency fund rather than a higher rate credit card.3. Pay It OffLastly you can pay off the HELOC. If you already have all of your debt paid off and you have a fully funded emergency fund, then pay off the HELOC and get rid of it. Let’s face it, ultimately any sort of home equity loan or line of credit is debt. And it needs to go. If you have no real need for it then pay it off and eliminate that debt. Do not get the wrong idea that you have to keep it just in case. It is debt and needs to be gone. This is the best option of what to do with a home equity loan.No matter what you do be careful to fully think through the possible ramifications of using your home equity. The use of home equity potentially puts your home at risk if for some reason you can not pay back the home equity loan. Do not treat it lightly. Otherwise if you do have a home equity line of credit or loan carefully consider using it to help eliminate higher interest rate debt. Use it as a temporary emergency fund. And then pay it off and erase debt as fast as you can.

The Various Financing Options of a Home Equity

If you are a homeowner who has some equity in your home and you are in a situation where you need to borrow some money, then a home equity line of credit can be a great option. Equity loans can be used for just about any type of purchase that you deem necessary, from home improvements to vacations. Once the equity credit line has been established, it is up to the homeowner how the money will be used.In many instances, people who have run into financial problems and have ended up with a damaged credit report because of bad credit loans or bad credit mortgage problems, turn to equity loans when other sources of credit may not be available. Once people have nasty dings and negative marks on their credit report, it is much more difficult to get a refinance loan for any reason.If they are able to get a borrowing, then they usually end up paying such high interest loan rates that they cannot afford the payments. Even if they can afford the payments, taking out a high interest loan is just not a good financial move.In situations such as this, homeowners who have some growth in their property will be able to leverage that asset by borrowing money against the equity. Depending on the structure of the loan arrangement, this is considered a home equity loan or an equity line, as the credit is “secured” against the home.Since the borrowing is secured, the credit status of the borrower is not as important. That is not to say that people with horrible credit can waltz into a bank and get an equity loan without any problem. Even though the loan is secured, the lender will want to know that the borrower has the ability to repay.Of course, people with excellent credit are also able to utilize their home’s growth with lines of credit as well. But, in most instances people who have a high credit rating do not have any difficulty obtaining financing of any kind, such as mortgage refinancing, at very competitive interest rates.Still, because equity loans are secured against your home, just like a mortgage or automobile loan, the interest rates are lower than any kind of unsecured borrowing that people with good credit are able to get. With any other type of financing, the better the credit score, the lower the interest rates on the loan will be.Another advantage to homeowners, whether their credit is perfect or bruised, is that the interest that is paid on equity loans can be tax deductible. This aspect alone often motivates people to borrow against the growth in their home rather than using any other type of financing. They can enjoy a double benefit of a lower interest rate and a possible tax deduction if they use the long form to file their taxes.There is a note of warning that people should also be aware of regarding the use of home equity for bad credit loans. Even though these loans open the door for people to borrow money at lower interest rates, it also creates the potential for them to lose their home if they are unable to stay current with their payments. Because of this, these loans should be used only after careful consideration and evaluation of your ability to repay.

Bad Credit Home Equity Loans

A bad credit home equity loan is a kind of loan which allows a borrower to obtain a predetermined amount of cash against the equity of a home. You can get loans at a low rate as your credit would be secured by the home equity.Getting a loan as from the lender’s point of view home equity loans are comparatively safer especially when the borrower has a poor credit record. It is because the borrower can not hide or disappear with the house and that ensures the lenders of getting the collateral in case of a default. Another factor works here is that any borrower even who has a less-than-perfect credit record is likely to make payments on time as his home is on the line.There are some certain advantages of home equity loan. This includes low interest rate, easier to become qualified for the loan, possibility of getting a relatively large amount of loan and tax deductible payments. All of these are very helpful for a someone with poor credit that is why bad credit home equity loan is one of the best options for them.There are some pitfalls of home equity loans as well. People with poor credit should be aware of these pitfalls as they are already in a bad financial condition. For example, scammers can cheat homeowners in various ways and you can lose you home as a consequence. So before choosing your lender do some background check and agree for legitimate deals only. It is highly recommended to compare among several lenders so that you can get the best possible contract. In order to compare lenders you have to request for the credit quotes. You can easily access these quotes via online as most of the companies have their own website. While searching the quotes do not forget to look at the terms and conditions.A bad credit home equity loan will help you to refinance your necessary sectors like, paying bills, home improvement and so on and will certainly help a bad credit holder to improve his condition.

Home Equity Hiding in Your House – Your Greatest Asset

One of the most valuable assets you may have is not your stocks and bonds and
your diamonds, but your home. If you are like many individuals, you are not
aware of the hidden value of the equity in your home. There are many ways to
use this equity. We can only talk about a few of the most popular ones.You can take out a home equity line of credit and use it for just about any
purpose you can imagine-an addition to your home, start up a new business, fund
a retirement plan, make investments, or consolidate your debt. The latter is one
of the most popular uses for home equity debt. Using the equity in your home,
you can eliminate debt that is at high interest rates by paying it off with the
proceeds of your home equity line of credit. Besides saving money on interest,
you may also receive a tax deduction when you file you taxes.If you are not aware of these possibilities, it is time to learn about taking
out a second mortgage, a home equity line of credit or re-financing your current
mortgage. Some people may be afraid to risk such a valuable asset as their home
and they do not take advantage of these things because they are afraid they will
lose their homes. However, if you inform yourself about how these things work,
you can take advantage of them to be able to do things you dream of, such as
add a room onto your home or just make an existing room larger.If you have thought about how you could possibly use the equity in your home,
there are many ways this can be done. The possibilities about how to use these
funds are as varied as the people who decide to use them. What is the most
valuable use for you? Perhaps you should talk to your tax accountant or
financial advisor to decide what is right in your circumstances.As we said, you can take out a home equity line of credit, a second mortgage or
you can re-finance your current mortgage. A home equity line of credit is the
amount your bank can set aside for you that is the difference between the equity
in your home and the amount you currently owe on it. This kind of line usually
has a variable rate of interest, or it may be adjusted periodically based on the
prime rate. If you have an appraisal that is fairly new, say less than five
years old, the bank will probably let you use that to determine the value in the
house.A new mortgage re-finance will be a bit more complicated, since a new appraisal
is required and a new note is established. Because of this extra work, many
homeowners avoid them, but they are really a good idea since the rates on a
second mortgage are better than on an equity line of credit, and they are
usually fixed, so you won’t get hit with high interest over time.A second mortgage is closer to a home equity line of credit in that it taps the
difference between the existing home loan and the market value of the home.
Like the home equity line of credit, there is not usually a need for an
appraisal, title search or closing fees.But the tax benefit exists with all of these options. Any mortgage interest
paid, up to the value of the home, is tax deductible on your income tax. Even
if you have used the funds for something other than your home, you can take the
tax deduction, as long as the total loans are not greater than the total equity
in the home.So what can you use these new found funds for? You can think of almost anything
to use them for. One of the most common uses, as we discussed, is home
expansion or home improvement. But education costs for you or your children,
business startup costs,and many other uses can be found. No matter what you use
the funds for, you will find that using the equity in your home for your
financial needs is a great idea. You may find that after a number of years of
making payments on your mortgage you have built up a nice equity in your home
that you can take advantage of instead of having the value of it just sit there.

Consumers Guide to Home Equity Installment Loans

Looking for a way to fund new home renovations, invest in a second property, or pay for a child’s college education? A home equity installment loan might fit the bill. Consumers often turn to home equity loans as a way to finance a large expense or investment using the money they have already invested in their home, without refinancing their mortgage.What is a Home Equity Installment Loan?
A home equity installment loan is a loan that uses the equity you already have in your home as collateral. With your home’s equity as a guarantee, lenders are willing to offer larger loans at lower interest rates than many other types of loans.Unlike a home equity line of credit, most home equity installment loans are standard, one-time loans that are approved for a given amount and must be repaid over a pre-arranged schedule of installments ranging from three to 30 years, similar to a primary mortgage or car loan. Installment payment amounts include both principal and interest.Lenders offer installment loans based on some percentage of your home’s appraised value, less any outstanding mortgage amounts. The maximum loan amount is calculated according to the loan-to-value (LTV) ratio, which may be as high as 80-90%. This means if your home is worth $150,000 with a $100,000 mortgage balance ($50,000 in equity), at 90% LTV you could potentially qualify for a home equity installment loan for up to $45,000 ($50,000 x 90%).Who Uses Home Equity Installment Loans?
This type of loan can be used to finance anything from a home renovation to a wedding. Below are some of the main reasons consumers secure this type of credit:• Finance a home renovation
• Pay a child’s college tuition
• Pay off other, higher-interest debts
• Purchase a second home or rental property
• Invest in a business opportunity
• Pay for a wedding, anniversary, vacation, or another big celebration or eventInstallment loans are a good option if you have a large, lump payment that you need to make now but would like to pay off over time. They’re also ideal in a market with unstable interest rates, allowing you to lock in a low fixed rate.Advantages and Disadvantages
There are pros and cons to home equity installment loans, and times when this type of borrowing is more suitable than others. Read on for some tips to help you determine whether this type of loan is right for you.A home equity installment loan is ideal for a one-time purchase or investment, such as a home renovation or the payoff of a high-interest debt, where you will only need to draw funds once and are prepared to pay it back on a fixed schedule. An installment loan is probably not a good idea for frivolous purchases that may be difficult to pay back. If you default on the loan you stand to lose your home, so it’s important to be sure you’ll have the means to pay back the funds according to the agreed-upon terms.On the positive side, because your home serves as collateral, you’ll most likely be able to get a lower interest rate than an unsecured loan – which can mean big savings in interest payments over time. Interest rates are usually fixed for this type of loan, which makes it possible to lock in a lower rate that won’t change with market fluctuations. You may even be able to count the interest as a tax deduction.Home equity installment loans are perfect for consumers who are interested in one-time loans and are confident of their ability to repay it. They’re also a good fit for those who like the security of a fixed interest rate.

Mortgage Cycling: Build Equity and Pay off Your Mortgage Quickly Cycling Your Mortgage

Mortgage cycling is a strategy for building equity in your home and quickly paying down the balance of your mortgage loan. Cycling your mortgage is an effective strategy when executed properly; here are the basics you need to understand before attempting a mortgage cycling strategy to build equity in your home.Mortgage cycling is a repayment strategy that can shave ten years off the repayment of your mortgage loan. This is an effective strategy for any homeowner with a couple hundred dollars of disposable income every month. Many people don’t have this amount of cash on hand every month; if you don’t have the money there is still a way to implement this strategy using equity in your home.Mortgage cycling works by making large equity payments against the principle loan balance of your mortgage, several times every year. Many homeowners make $5,000 equity payments every six months. If you don’t have the cash on hand you can utilize a home equity line of credit to make the equity payments. You will need to pay off the equity line quickly, usually within six months to make the next equity payment. This is necessary to take full advantage of the mortgage cycling strategy. Making these payments quickly reduces the principle balance and the amount of your monthly payment that is applied to interest.If you use the home equity line of credit option to cycle your mortgage it is important to shop for a competitive home equity loan as you will have to pay interest, lender fees, and often closing costs to secure this loan. Most of these fees will be one-time up font expenses and you will only pay finance charges when you borrow against the equity line of credit. It is important to remember that home equity lines of credit come with variable interest rates; when interest rates go up, your payment amounts and finance charges go up with them. You need to factor this expense into your calculations before deciding to go forward with a mortgage cycling plan.To implement a mortgage cycling plan effectively you need to continue making the equity payments for a period of ten years. There are risks involved when using a home equity line of credit; because your home equity line is secured with your home if you fall behind on the payments you could lose your home. You can learn more about your mortgage options by registering for a free mortgage guidebook.