Do you need extra cash to pay your child’s college expenses, or perhaps you want to remodel your home? Whatever the reason, a home equity line of credit, or HELOC is the answer. A home equity line of credit is unlike a standard loan and a mortgage refinance. Here are three reasons why you should apply for a HELOC.1. Easy Access to Fund: With a home equity line of credit, accessing money from your account is easy. In many cases, the home equity lender supplies borrowers with checks or a debit/credit card. Whenever you need extra cash for a project or emergency, simply write yourself a check or use a debit/credit card to withdraw money. The entire process is simple and convenient, and you do not have to wait days to access the money. The funds are available when you need it.2. Converts to a Fixed Rate: The majority of home equity lines of credits are adjustable rates. However, some have the option of converting to a fixed rate, which is good for persons who don’t want to deal with an interest rate increase. Before applying for a specific HELOC, inquire about the option to switch to a fixed rate. A fixed rate is desirable because adjustable home equity lines of credits do not have a rate cap. Since interest rates can change rapidly, a sudden rise will increase minimum payments.3. Long Withdraw Period: Home equity lines of credit offer a long withdraw period. Once a request for a home equity line of credit is approved, the borrower is free to draw on the account for a set period of up to 10 years. As long as the account remains in good standing, the funds are available to the homeowner. If the borrower does not repay the HELOC, the mortgage lender can terminate the line of credit early, and request full repayment
You can refinance your home equity loan for lower rates, just like with any other type of credit. Improving your credit and shopping for rates ensure that you will get the best financial deal. Researching lenders couldn’t be easier with rates and terms offered online for easy comparison.1. You Can Improve Your Credit ScoreCredit scores are fluid, changing every time you pay a bill or open an account. While huge credit score improvements take time, you can quickly polish your score with a few steps.First, check your free annual credit report for any errors. Also, spread out any credit card debt amongst your accounts so no card is maxed. Paying off debts and closing unused credit accounts are also good steps.Improving your credit will improve the rates you qualify for, along with other types of credit. However, even if you don’t dramatically perk up your credit score, you can still find great rates.2. Lenders Charge Different RatesLenders charge different rates than what are being quoted in the news. Financial companies determine their rates based on market demands and competition. You can find these below average rates by shopping around.Don’t just stick with the big named companies. Less known companies often offer better rates and terms in order to compete. Online access allows you to find these great deals. You may also find good rates through a broker site.While a difference of less than a percent may seem trivial, it can save you hundreds over the course of your loan. Taking some time to research lenders is really an investment that pays real dividends.3. You Can Request Free QuotesFinancing shopping couldn’t be easier or faster with the internet. Most lenders post their financing information online. You can also request a basic quote by providing some preliminary information.By requesting quotes first, you can compare lenders without filling out a ton of paperwork or authorizing a credit check, which temporarily hurts your credit score.While rates are easy numbers to look at, search for the APR, which includes both fees and rates. That way you can be sure you won’t get stung with large upfront costs.
Home equity loans are an attractive aspect of homeownership. Obtaining a loan from a financial institution is difficult. Applicants must have sufficient collateral or their loan request is denied. Individuals who take out a home equity loan can tap into their home’s equity to borrow money. The funds received can serve many purposes – home improvements, education, or paying off high interest credit cards.Why Choose a Home Equity Loan?When homeowners need quick cash, a home equity loan is the best option. Some choose to refinance their home and wrap the borrowed money into a new mortgage. This is a great option for individuals hoping to avoid making two monthly payments, and for homeowners who had high interest mortgage rates. On the flip side, refinancing a home is similar to applying for new mortgage. The process is lengthy and homeowners are required to pay fees such as closing costs, prepayment penalty fees, and title search fees.Home equity loans do not involve high fees and funds are received within five to seven days.How to Choose a Home Equity Loan Company?Second mortgages or home equity loans carry a higher interest rate than first mortgages. To obtain the best rate, homeowners should obtain quotes from several different loan companies. To begin, homeowners may contact their current mortgage company and determine whether they qualify for a second mortgage. Because a relationship and payment history is established, homeowners might be able to negotiate a low rate.Homeowners may also contact home equity loan companies located in their local area. These include banks, mortgage companies, and other financial institutions. Homeowners should request information on how to qualify for a loan. It is recommended that at least three financial institutions are contacted. Next, homeowners should obtain a quote or estimate from each lender. Compare rates and services, and choose the company with the best offer.Obtaining a home equity loans through a mortgage broker is another option. Brokers work directly with various lenders who specialize in home equity loans for all types of credits. Online brokers are very convenient. Homeowners submit a single application, and within 24 hours they will receive multiple offers from several lenders competing for their business.
No matter what your credit situation, you can refinance your home equity line of credit. Trading in the unpredictability of adjustable rates, you can refi for secure rates. You also have the option to restructure your debt, enabling you to get out of debt sooner or to extend your terms for more manageable payments.When Does Credit Matter?Your credit score won’t prevent you from refinancing since you already have the security of your home to back your refi. Poor credit will affect the rates you can qualify for. However, you can overcome this with a few tips.First of all, carefully search out loan quotes to find the lowest
rates. You don’t want to base your decision on publicly posted rates since they don’t apply to your credit situation. Instead, request loan estimates based on your unique credit profile, just don’t allow access to your credit report at this time.You can also trim rates by rolling over your line of credit into a
second mortgage or combining it with your first mortgage. These types of loans offer better rates than line of credits, but closing costs are more expensive. Another option is to shorten your loan term to five years. Not only will you save money on actual interest charges, but you will also qualify for lower rates.Are Lowest Rates The Only Goal?There are many loan options that affect your financial bottom line besides rates. For instance, loan terms can save you money on interest or help you reduce your monthly payment. Ideally, you want the cheapest, shortest loan. But if finances are tight, paying additional interest to lengthen your loan may be worth it.Peace of mind is also important to people, especially when it comes to their mortgage payments. That’s why a fixed rate loan can be appealing, even if it has higher rates than adjustable rate loans. Caps, which are negotiable, also offer security for those with adjustable rates.Closing costs and annual fees can also add to the cost of a loan. That’s why you want to consider the APR to understand the true cost of the loan. With a little bit of comparison shopping on your part, you can find a reasonable refinancing no matter what your credit score is.
Equity for an individual or a business is defined as the total assets minus the total liabilities. For instance, when a borrower has a loan against property, the equity of the borrower is determined by the amount he or she has already paid. The current value of the property is estimated, and the amount owed as loan is subtracted from the value. This amount is considered the equity of the borrower. A line of credit is defined as the maximum amount of money that a person can borrow from a financial institution without requiring any additional approval. The lender determines it on the basis of two major factors namely the credibility or credit worthiness of the borrower and earning power. Quite often, these calculations are quite complicated and both borrowers and lenders turn to equity line of credit calculators.Equity line of credit calculators help borrowers find out the extent of credit they can obtain from their lenders. To calculate this, the borrower has to find out the maximum, combined loan-to-value (CLTV) ratio. The loan to value ratio is calculated as the percentage of the property’s appraised value that the lender will lend the borrower. The loan, in this case, is the sum of the proposed credit line, plus the balance of any outstanding mortgage debt. Value is defined as the current market value of the property, which is generally assessed by an independent appraiser.Equity line of credit calculators also allow the borrower to assess whether debts need to be consolidated. Consolidation of debts means combining all existing debts into one loan. This may help the borrower gain a more favorable interest rate. Borrowers typically enter the number of months needed for repayment and the calculator displays the monthly payment, savings in interest expense, any tax-related savings and the total cost savings.An equity line of credit calculator helps a borrower decide a cheaper financing source for an auto loan or a home equity loan.
A home equity loan is a loan based on the equity of your home. In a home equity loan, the lender shares a security interest in your home. If the loan is not repaid with interest, the lender can claim your home. Equity is the value of your home, minus any mortgages and liens.The loan is available in two formats. The Home Equity Line of Credit or HELOC is offered like a credit card and permits you to draw money against the equity in an emergency. HELOC is available at lower interest rates. The other format of homeowner loans is the Home Equity Loan or HELOC. The interest rate of the loan is fixed with a set repayment schedule. The repayment term of a HELOC is usually limited to 20 years.HELOC provides an easy access to money, without unnecessary formalities. These loans are made available at a favorable interest rate. Taking into consideration an applicant’s credit history and the prevailing interest rate, the applicant is offered home equity at a reasonable rate. Relatively inexpensive to obtain, a home equity loan can be used for any purpose, such as home improvement, college tuition, debt consolidation or buying a new car and even funding a vacation. However, HELOC is a second mortgage. The rate of a HELOC is higher than a fixed-rate first mortgage. This makes the loan riskier for lenders to recoup their investment. The higher rate of interest leads to the creation of a higher monthly payment.On the other hand, a HELOC provides the applicant with more repayment flexibility and provides the appropriate amount when needed. The HELOC best serves short-term finance needs. It is the best assurance to availability of cash and can be covered within a few months after it has been incurred.There are a number of disadvantages with HELOC. The rates of interest fluctuate with time. Private banks providing HELOC sometimes exploit the borrowers, regardless of age or gender. These lenders are even known to use abusive and exploitative strategies to recover their loans. Thus, it is necessary for loan-applicants to conduct thorough research before borrowing.
Practically everyone breathing air and with a heartbeat would want unlimited access to funds whenever they want, and at very favorable interest rates to ‘boot’, right? Well that is fairly obvious, but there is a cap to everything and within the financial world, nothing is truly that easy, or is it?When we think of borrowing or getting a loan, we want it all and then some if we had our druthers, however, many loans are designed to feed you cash while hurting you with poor rates and terms attached. A home equity line has been associated with being one of the most flexible options any homeowner can immerse themselves in!That said, lets examine in depth as to why this indeed is the case. Firstly, when we think of flexibility, we draw up the notion of ‘on our demand’, and when we deem necessary. This is exactly what a home equity line of credit can and does do for millions everyday!Although, there is a potential downside to this also, it can also turn out to be less of a blessing and more of a liability if not used properly. The definitive upside to the ‘HELOC’ as many would abbreviate it, is your capability to utilize these funds on an ongoing basis.This fact alone is the most alluring aspect of the home equity line credit! Furthermore, the rates that lenders charge you are significantly lower than practically any credit card you could obtain anywhere! In addition, these funds can be used for pretty much whatever including emergencies, home improvements, debt consolidation, and even as a second note to your primary mortgage.Even though, the rate of interest is usually variable to a slight degree, you can convert this to a fixed rate usually without much problem (again flexibility). Moreover, your interest can be tax deductible but make certain you refer to your proper IRS publications (no. 936) for verifications and limitations.Finally, you can consistently borrow up to the maximum amount you were initially approved for and revolve around this concept as long as you have the note. Yes, the home equity line is probably the most flexible conventional lender based loan you can obtain. Take advantage of it’s flexibility today as rates continue to be very favorable to borrowers everywhere.
The end of the second quarter of 2010 is almost at an end and mortgage interest rates are currently near historic lows. This is very encouraging for anyone looking to secure a new mortgage or to refinance an existing mortgage at a lower interest rate.Now might be a great time to consolidate some high interest bearing credit card debt, or to invest in a new addition to your home, or pay for an education. What ever the case may be, if you have equity in your home, there is a way to access that cash and spend it how you choose.Generally speaking, there are two options to tap the equity in your home: cash out refinancing or a home equity loan. To determine which option is best for you, it is important to know the differences between the two options.Cash out refinancing differs from a home equity loan in a few ways:A cash-out refinance is a replacement of your primary mortgage
A home equity loan is a separate loan in addition to your primary mortgage
Interest rates on a cash-out refinance are often times lower than what you are charged for a home equity loan, although not always
When you do a cash-out refinance, you will pay closing costs
Generally, you are not charged closing costs when you secure a home equity loanHome equity loans are generally better under the following circumstances:If you simply want to access a small amount of your available equity
You need access to an open line of credit
You plan to pay off the home equity loan before your primary mortgage loanA quick way to determine whether or not you should refinance is to compare your expected interest rate to your existing one. It never makes sense to refinance a higher amount at a higher rate. You should also pay attention to what you will be charged in closing costs if you decide to do a cash-out refinance since closing costs can often add up quickly, making the cost of refinancing too much to justify.Work with a lender you trust and ask them for advice given your specific situation. They will be able to help you determine all of the associated risks and benefits so you can make an informed and comfortable decision.Follow this link and find a reputable lender online to help with a cash-out refinance or a home equity loan.
Home equity lines of credits or HELOC, are revolving credit accounts that are protected by a home’s equity. Homeowners have many options for accessing their home’s equity. Home equity loans are ideal for obtaining a one-time lump sum of cash. On the other hand, if homeowners prefer an open line of credit, which enables them to borrow as needed, a HELOC is
a better option.What is a HELOC?When homeowners apply for a home equity line of credit, they obtain a credit line which uses their home as collateral. There are different types of home equity lines of credits. Some homeowners may obtain limits up to 75% of their home’s appraisal value, whereas others obtain limits that match the amount of equity.The majority of home equity loans have a fixed term of 10 years. During this time, homeowners are able to withdraw funds as needed. Unlike home equity loans, monthly payments are not fixed. Payments are based on the dollar amount borrowed from the home equity line of credit, thus minimum monthly payments will fluctuate.Benefits of a Fixed Rate HELOCIf choosing a home equity line of credit, homeowners may opt for a fixed rate. There are several benefits to choosing a fixed rate line of credit. The obvious reason is predictability.Although monthly payment will fluctuate depending on the amount borrowed, homeowners will never have to worry about an interest rate hike during the 10 year period. Furthermore, a fixed rate line of credit will offer significant long-term savings – especially if rates continue to rise.Many are attracted to adjustable rate lines of credits because of low initial rates. However, the rates on an adjustable line of credit can change daily. Thus, if homeowners borrow a large amount, they may be hit with noticeably higher payments.Disadvantages of a Fixed Rate HELOCAlthough fixed rate home equity lines of credit offer stability and predictability, there are potential drawbacks of this option. For example, if interest rates decrease and remain low, those who choose a fixed rate option will not benefit because their rate is locked for a fixed term. Borrowers can switch from a fixed to an adjustable rate. However, there are penalties for doing so.
Have you taken the opportunity to look closer at a Wells Fargo home equity line of credit recently? This revolving credit line that homeowners can tap into has some pretty good features. Here’s a closer look at what Wells Fargo is doing.A home equity line of credit is similar to a loan with the main difference being that you can take out funds at any time up to the total amount of the credit line.This is better than a loan in many cases because you are only using what you need instead of taking out a big lump sum. Wells Fargo home equity lines of credit make it possible to only have to use your money when you really want to.Naturally, what you use the money for is completely up to you. Many use it to pay off high interest debt, medical bills or a home improvement project to further increase the value of their home.Wells Fargo offers a wide array of convenient options in gaining access to your funds. It can be through your checking account, ATM, Wells Fargo credit card, or simply by visiting your local branch bank.This type of home equity line of credit being offered by Wells Fargo has a standard 10 year open credit period. After that time your repayment begins.Funds that you take out of your HELOC may be paid back with small minimum payments or in some cases it can simply be an interest only payment.Depending on the Wells Fargo plan and size of the credit line, payments can be stretched out for as long as 30 years after the credit period ends.As with most home equity loans or lines of credit, interest rates are based on the Prime Lending Rate at the time of your loan. Since this is a line of credit, your rate will be variable, meaning it can go up or down. This is something to consider before taking out a HELOC.A Wells Fargo home equity line of credit, like any other credit line, will have certain fees involved when signing up. These fees can include appraisal fees, loan fees and others as well. It really depends on the type of loan and your credit history.If you are looking at setting up a home equity line of credit you will want to take a good look at what Wells Fargo has to offer.