Homeowners usually have several home equity loans questions, especially those who have financial needs.
Maybe you have heard about home equity loans and you want to know a lot of things about it. Actually, home equity loans are very popular most especially to homeowners for only one reason and that is, they can borrow a lot of money from home equity loans.
But before you get exited of the "a lot of money" thing, I'm sure you have several home equity loans questions playing in your mind. The most frequently asked home equity loans questions are:
o What is a home equity loan?
o What is a home equity
o What is the difference between a home equity loan and a home equity line of credit?
o What can a home equity loan be used for?
o How much can I borrow?
o How quickly can I get a loan approved?
These are just some of the many home equity loans questions asked by many homeowners who have heard about home equity loans and I'll give you the answers those questions as simple as possible.
A home equity loan, or second mortgage, allows you to borrow large amount of money against the equity you've built up in your home at very competitive interest rate. Home equity is the difference between your home's appraised value (current market value) and the total amount you owe on your mortgage. If your home is worth $ 100, 000 and you owe, let's say $ 40, 000, you have $ 60, 000 in home equity.
There are two types oh home equity loans, the home equity and the home equity line of credit. Both types let you tap into the value you've built up in your home, they have significant differences. Home equity loan is like a second mortgage wherein you get the money in lump sum and pay it off over an agreed term, which can be 5 to 30 years. Once you get the money, you can't borrow any further, the total monthly payment is based on the total amount of the loan, and interest can be tax deductible.
Conversely, home equity line of credit allows you to borrow money as you need it and pay the interest on the outstanding amount. The monthly payment is based on the amount used and funds can be re-used as they're paid off up to the credit limit. You can access credit line by using checks as many times as you like during the draw period up to your credit limit, and tax may also be deductible.
Home equity loans can be used for a lot of thing, more important things to be exact. Since your home is on the line here, you might want to spend the money in bigger things like college tuition, hospital bills, home renovations, consolidate debts, or any of life's big expenses.
The whole process of loan application may take 10 to 14 days to approve. But even before it's approved you can determine the possible amount you can borrow. The total amount you can borrow usually depends on the percentage set by lenders, your ability to repay, debts, and other financial obligation. For example,
Your home's appraised value $ 100,000
Percentage x 80 %
Percentage of appraised value = $ 80,000
Less the amount owed on mortgage - $ 40, 000
Potential amount you can borrow $ 40, 000
Some of the home equity loans questions not included here, you can ask any home equity loans questions from any lenders and friends who have tried it. If you think home equity loans might be the answer to you financial need for now, shop around and negotiate as many lenders as you can to get the best deal.
.