Essentials of Borrowing





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Essentials of Borrowing

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Home Equity Loan

Home Equity Loan is the money that you get as a loan based on the value of your own home. In other words the money that you have invested in purchasing that lovely home can be leveraged to buy a Car, pay off Student Loan or any other loans. Other then being easily available at attractive rates, it’s a loan that is interest deductible. Some benefits of taking a Home Equity Loans are: Fixed payment and rate 5, 10 and 15 year fully amortizing loan terms available Minimum loan amount as low as $10,000 Borrow up to 100% of the value of your home Loan amounts up to $200,000. Home Equity Loans can be used to pay off the other higher interest rate loans such as credit card loans etc as well as save some money in the form of income tax deductions that are available on payment of interest rates. In a standard home equity loan, a specified amount of money is loaned in a lump sum for a definite period of time (say around 15 year or a 30 year loan).

A standard home equity loan is also called a Second Mortgage Installment Loan. Home equity loans allow you make some profit on the capital you invested in your home without selling the home. Steps to get a Home Equity Loan: To get a Home Equity Loan there some issues that you must look into. The first step involves analyzing the these issues as they will determine the amount of money you take as a loan and the tenure etc. The issues are: Make sure that the home that you want to offer as collateral is sufficiently valued. If you have any relationship with financial institution, you must contact them for this loan also. They will give you preferential treatment instead of a new institution that will start the relationship with you. If you want to deal with a new institution ask your local real estate mortgage broker to recommend lenders. Although factors like loan to value ratio, credit history etc will dictate if you can have affixed or floating rate loan, sometimes you may have the choice, so make up your mind. Decide if you want The Standard Home Equity Loan, Home Equity Line Of Credit or Cash-Out Refinancing. The Standard home Equity Loan or term Loan is like a traditional loan and works like a Second Mortgage Loan. You will get a lump sum amount at fixed rate of interest that will be repayable in monthly installments, each of certain fixed amounts. Three kinds of Equity Loans you can take: Home Equity Line of Credit works like a normal line of credit where you are granted loan but you do not get full amount, you get the sum that you can withdraw the sum as and when you want it. In Cash out Refinancing, you get a sum of money that exceeds the current mortgage that you owe to the lender; you pay off the current debt and keep whatever is left for any other purpose.

Applying for the loan: The loan process takes some time and is not as fast as other loans. Usually you will get a loan in about three weeks of applying. When you apply for the loan, the lender will take into account following information: Your Credit History and Credit Report Debt-to-Income Ratio Your LTV Ratio (Loan To Value Ratio) Employment History So keep all this information in good stead such that you will have no issues with any lender when you have applied for the loan. The process of loan involves putting the application and some documents that will be submitted after as per the check list of lender. After that the Home is valued by an independent Assuror, who will put a value to your home. Nest step is that the lender will ask for your Credit History etc after taking your permission. The lender will make an assessment and will draft the Loan Document. Once this is drafted, you can go through it, scrutinize and sign it. The loan will then be sent to your bank account! Now you can make any use of this money.


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Mortgage Tips Mortgage Free Borrowing Investing
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Essentials of Borrowing





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