If you own a home, your options for leveraging your equity are
numerous. Some homeowners choose to refinance their home and withdraw the money in
closure. This can serve a dual purpose. You can lower your
interest rate, while purchasing a lump sum of money. Those who want access
For emergency cash you can opt for an equity line of credit. However, if
not interested in refinancing but need extra cash, a home equity
The loan can be the perfect choice.
What is a home equity loan?
A home equity loan is very similar to personal bank loans. However,
Unlike personal bank loans that are difficult to qualify for, you can get
a home equity loan with good or bad credit. Lenders are most eager to
approve a home equity loan because the funds are secured by the property.
So if you have a low credit score, you can get a loan. Of course a
A low credit score can result in a higher mortgage rate.
When to get a fixed rate home equity loan?
Before applying for a home equity loan, carefully consider
advantages and disadvantages. A home equity loan is a second mortgage. Instead of
to pay a monthly mortgage, you are now responsible for two
mortgage payments. The second mortgage is generally cheaper, so it is easier
pay off.
Home equity loans are great for consolidating or eliminating high
interest on credit card debts. In this way, you can pay your consumer
debt at a low fixed rate and within a specified period of time. Home
Stock loans are also useful when you have a large expense.
When to avoid home equity loans?
While home equity loans are very tempting, avoid applying for a loan if
can’t pay another bill. In some cases, a second mortgage can
improve your finances. By consolidating credit card debt, you can save
money every month. However, if you have difficulty paying
creditors on time, do not get a home equity loan. Most likely you
You will also have a hard time paying the second mortgage. Therefore, you are placing
you yourself risk losing your home.