The three biggest advantages a home equity loan
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Posted On :
Nov-13-2011
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Article Word Count :
523
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A home equity loan is a lump sum credit a homeowner, allowing them to purchase their home as security for payment. This type of loan is attractive to consumers who have bad credit may, but need a large amount of money.
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Apart from these advantages, the borrower a lower interest rate and the ability to receive tax deductible interest.
Why do lenders offer large volumes and lower interest rates? Since the lender to understand that most homeowners do not risk borrowers pay their loans diligently for the loss of their homes. In addition, the borrower can not tuck away the house or hide.
The three biggest advantages that a home equity loan are:
Large amount of the loan
The borrower may receive as much as 85% of estimated value of their house, owed minus the unpaid mortgage payments on the first mortgage. However, there are other factors as well that to evaluate the lenders, such as the creditworthiness of the borrowers are, monthly income, or the ability to pay and the state of the troubled loans. If the borrower is spotty credit record, the loan will be necessarily smaller.
Low fixed interest rate and tax deductible.
This type of loan has a lower interest rate compared to the input of personal loans or credit cards. In addition, a fixed interest rate ensures that the payment remains constant until the end of the entire loan. This makes it easy to revise the monthly payments into your budget. Another advantage of a borrower's claim may include tax deductions on the interest on the loan for not less than $ 100,000.00. However, do not assume that the advertised APR (annual percentage rate), the real one. Questions and shop around.
Ease of Use
The one-time publication of the entire loan allows the borrower to consolidate existing debt to pay for home improvements or the amount you use in an emergency or a big-ticket items.
The two real disadvantages are:
Home Foreclosure
If you default in the payment of principal and interest payments on the loan fees, you lose your home. This is certainly not the ideal type of loan for a couple who could use their retirement money to bail out of the difficulty, or first time homeowners, inexperienced in dealing with finances. Therefore, if you negotiate with the lender, you should be connected to the penalties for late payments, as well as to provide the conditions in default payments and have all your agreements documented.
Long term period
The convenience of repayment of the loan, which can vary from a 15 to 30 years period, is ultimately more expensive because they take longer to pay. Another negative possibility is when the real estate market by proposing to you for a home that is worth a lot less pay. This could be a disaster especially when you are anxious to sell the house. On the other hand, you are obliged to pay the remaining debt, if the house up for sale.
In view of what you now know about home equity loans, a more conservative borrowers. Think carefully about why you need the loan and if you can comfortably meet the monthly payments. Then you find out about the options that will best serve your financial needs and still leave you with your home.
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Article Source :
http://www.articleseen.com/Article_The three biggest advantages a home equity loan_103645.aspx
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Category :
Finance
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Finance
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