Home equity is the current market value of a property built up in a home or property less any remaining mortgage payments. This value is built up by the holder of the mortgage through payments and appreciation. Basically, a home evaluated as worth $300,000.00 and the owner still owes $150,000.00, his equity is $150,000.00. Liens or second mortgage on the property can also be subtracted from the appraised value.
It can serve as collateral for a home equity loan usually set as fixed period like 10 years and the borrower can renew his credit line after depending on the guidelines of the lender because some lenders will require a borrower to pay the full outstanding balance after the 'draw period' has been reached.
More often than not, home owners borrow against their equity and use the money for improvements to the home to put their established equity to work for them. Aside from home improvements, home owners use the money for their children's tuition, to purchase additional property, while some venture in a new business.
Even if you can borrow the full amount of your equity, you have to be very careful before securing such loan since your home is the collateral and at stake if you wouldn't be able to pay your home equity loan.
It is wise to consult financial adviser in this case to guide you in securing your home equity loan or line of credit. You will surely lose your home if you will not be able to pay the borrowed amount so, it is best to know your financial status first to determine is the monthly payment is not a burden to you, know home equity by heart, and have an agent working by your side before engaging in the 'business.'
By educating yourself with the real process of securing home equity loan, you'll be able to avoid this pitfalls and of course of losing your home. Watch out for fraudsters who just want to cheat on home owners.
It can serve as collateral for a home equity loan usually set as fixed period like 10 years and the borrower can renew his credit line after depending on the guidelines of the lender because some lenders will require a borrower to pay the full outstanding balance after the 'draw period' has been reached.
More often than not, home owners borrow against their equity and use the money for improvements to the home to put their established equity to work for them. Aside from home improvements, home owners use the money for their children's tuition, to purchase additional property, while some venture in a new business.
Even if you can borrow the full amount of your equity, you have to be very careful before securing such loan since your home is the collateral and at stake if you wouldn't be able to pay your home equity loan.
It is wise to consult financial adviser in this case to guide you in securing your home equity loan or line of credit. You will surely lose your home if you will not be able to pay the borrowed amount so, it is best to know your financial status first to determine is the monthly payment is not a burden to you, know home equity by heart, and have an agent working by your side before engaging in the 'business.'
By educating yourself with the real process of securing home equity loan, you'll be able to avoid this pitfalls and of course of losing your home. Watch out for fraudsters who just want to cheat on home owners.
About the Author:
A home is one of the biggest investment you'll ever make. Whether it's a single family home at Tooele Real Estate, never bite off more than you can chew. Always take your time in before making up your mind before buying or a Homes for Sale in Detroit Michigan.
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