Guide to Home Equity Loans

Here is a useful guide to home equity loans. A home equity loan is quite simply a loan against your house. Another term for a home equity loan is a mortgage or second mortgage. Home equity loans are also known as equity release schemes.

You are borrowing on what your house is worth. If your house is paid off, the term is "mortgage" and if your house is not paid off but has equity, the term is called a "second mortgage". For ease of understanding however, this article will refer to these loans as Home Equity Loans.

A home equity loan is a second loan that you take out on your home in addition to your mortgage. This is also called a second mortgage. This enables you to tap into your equity to get cash without refinancing your first mortgage. Many people think that the only way to access this cash is to sell their homes. The reality is that you can take out home equity loans to free it up without having to move at all!

Equity is the difference between the amount you owe on your current home mortgage and the current value of your home. Lot of finance companies today offer good deals on home equity loans, letting you borrow money based on the available equity on your home.

This can be explained further, suppose you sold your home, you will be left with a certain amount of money after paying off your mortgage, which would mean actual cash in your pockets. A home equity loan allows you to get that cash without having to actually sell your home or property.

The amount you can borrow is determined by taking a percentage of your home's appraised value and subtracting the balances of any outstanding mortgages. A home equity loan is fairly easy to get, if you are a homeowner. Some home equity loan companies will allow you to borrow up to 125% of what your house is worth at the current market prices, less the amount that you owe on your mortgage.

A home equity loan is usually a one-time loan, which is paid out in a lump sum. A home equity loan can be used for anything and is usually a fixed interest rate loan.

The cost of the loan will depend on many factors including your personal circumstances, the amount you wish to borrow and over what period you wish to repay back the loan.

Some good uses for home equity loans include debt consolidation, buying of a new car, home improvement, emergency medical expenses or luxury holiday.

People with poor credit ratings will find a Home Equity Loan more easily accessible to them because the lender is taking a lot less risk as the loan is secured against their home.

A Home Equity Loan will usually mean that you get better interest rates on the loan, but you should always remember that your house is at risk if you fail to repay the Home Equity Loan.

You may freely reprint this article provided the author's biography remains intact:

About the Author

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.

Why consider refinancing? (Federal Reserve Board)
The interest rate on your mortgage is tied directly to how much you pay on your mortgage each month--lower rates usually mean lower payments. You may be able to get a lower rate because of changes in the market conditions or because your credit score has improved.

Drive an Expensive Import? You Probably Lease It (BusinessWeek Online via Yahoo! News)
Upscale brands like BMW , Saab, and others are cutting back on leasing for some of the same reasons Chrysler quit leasing outright, effective Aug. 1. Ford Motor and General Motors have also said they are taking incentive money out of leasing and putting it toward cut-rate loans and cash rebates.

TD Bank Financial Group Reports Third Quarter 2008 Results; Raises Dividend (PR Newswire via Yahoo! Finance)
Reported diluted earnings per share were $1.21, compared with

TD Bank Financial Group Reports Third Quarter 2008 Results; Raises Dividend (CNW Group via Yahoo! Finance)
TD Bank Financial Group today announced its financial results for the third quarter ended July 31, 2008. Overall results for the quarter reflected solid earnings contributions from TDBFG's personal and commercial banking operations in both Canada and the United States and its Wealth Management segment, while the performance of Wholesale Bankingwas affected by continuing challenges in financial ...

How to get a gem for a bargain (The Record)
Though a record number of Americans now owe more on their mortgages than their homes are worth, countless other homeowners have plenty of equity. And real estate experts say many of these equity holders are in an excellent position to move up to a better home at a big discount.

Home page

Information Index