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If your seeking Equity Mortgage Solutions, there are many options. Your house is more than likely your biggest asset. After you have spent some years paying the mortgage off, it can become one of your strongest tools for financial freedom because the equity you have built up allows you to take advantage of a larger spectrum of options for borrowing. It’s true that there are other types of unsecured loans out there, including personal credit, but there are quite a few reasons to consider a home equity loan as well. If you need access to credit going forward, or you need some cash now, there are home equity solutions that will work for you. Take a look at the advantages of the different ways to access your equity.
Home Equity Line of Credit (HELOC)
If you don’t need cash right now but anticipate that you may need a good bit in the coming months or years, a home equity line of credit (HELOC) can be a great solution. For example, your oldest son may be heading off to college in the fall. He’s got a few scholarships and a work-study job on campus, but he may need some more assistance down the line. If you don’t have to dip into your line of credit, all the better. However, if something major comes up, you’re ready. Once you’ve applied and been approved, you can access it at any time. As you pay off what you access, your limit rises again.
Putting your home up as security for the line of credit often results in interest rates that are significantly lower than what you can get from other credit products that are unsecured. Most HELOCs have interest rates that vary with the prime rate of the lender.
Some lenders offer you the chance to lock some or all of your outstanding HELOC balance into an interest rate that is fixed for up to five years to keep your rate from going up on at least that part of your debt. Most of the time, this is a closed loan, meaning that paying it early can bring penalties, but at least you’re protected from interest rate spikes.
Many lenders will give you access 24/7 to your HELOC. Specific options generally include stopping by the bank to get additional funds, logging in online to transfer from your line of credit, having an access card that can use an ATM or purchase items directly. It is even possible in some cases to acquire cheques that draw on this line of credit.
Home Equity Loan
In some cases, you need the money up front, rather than having access to it over time. You might need that down payment (or total payment) for that vacation home or that new boat right away, but you won’t need money after that. In that instance, getting your money all up front makes sense. At closing, you will walk away with a check for the entire amount of the equity loan. You still get the advantages of the lower interest rates that home equity credit brings, and you often won’t have closing costs in either event. Many lenders are looking to build their loan business, as the regulations that sprang up in the aftermath of the housing collapse of 2008-2009 have kept many people out of the mortgage market, because they can’t meet the new guidelines for traditional lenders. To replace this revenue, many banks are jumping actively into the home equity market. This is good news for you, because you are likely to be able to walk out without paying any closing costs at all.
Whether you use the HELOC or home equity loan, you are looking at getting access to a powerful financial tool from your home. It is good to remember, though, that you are increasing the amount you owe on your home. You are likely to face a larger monthly outlay for your loans, as you still have your original payment plus the payment for your home equity loan. If you are using the loan to take care of some outstanding debts, make sure that you can afford the new payment in your budget.
To find out more about how Amansad Financial can connect you with providers for home equity loans and HELOCs in your area, call one of our mortgage specialists today. We look forward to serving you!