Mortgage Home Equity - Lump Sum Cash for Home Improvement, Vacation and Paying Off Bills
To see how much home equity you have, find out how much your home would sell for. Subtract the amount of money still outstanding on your mortgage and the result is the amount of money you can borrow. Some lenders will only approve loans of 80% of this amount, but if you have excellent credit, there are lenders who will give you a loan of 125% of the amount of equity. However, in order to qualify, you must have 20% of the mortgage paid off.
The rate of interest on a home equity loan varies from one lender to another. The market conditions determine this rate. The government sets a prime lending rate and then the various lenders charge an amount above this rate. Since a home equity loan is a secured loan because the home is the collateral, the interest rates are generally low - just a margin above the prime lending rate.
There are closing costs if you get a loan based on your home equity. These include the lawyer's fees, the paperwork and the appraisal. You have to provide proof of ownership and proof that you have income sufficient enough to make the payments on the loan and your mortgage. This is not combined with your regular mortgage and means you will have another payment each month.
You can choose to use the home equity to get a lump sum payment in a loan with a fixed monthly payment on the principal and interest. You can also choose to get a home equity line of credit, which allows you to draw on funds as you need them. You only pay on the outstanding balance and the interest that has accrued each month with this type of loan.
With so many lenders available online, you can apply for a loan on your home equity right from home on your computer. In fact, it is advisable to apply to at least three lenders so that you can compare the rates and the amount of the payments. This lets you find the best deal that suits your financial situation. If you do choose a lender and decide to take out a home equity loan, you can always change your mind. Most lenders have a grace period of 12 days in which you can opt out of the loan without incurring any costs.
Related Tags: equity, home equity loan, home improvement loan, mortgage financing, refinance home equity loan
Richard Cunningham is a successful entrepreneur and publisher of several profitable websites including AutoInsuranceQuoteRanger.com. Visit his website to learn more about San Diego auto insurance.
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