What’s a Home Equity Loan, and why should I consider getting one?
A Home Equity Loan is a loan that is secured by your house’s equity. This loan has a fixed rate and term, and you get all the money you need in a single lump sum. Many people prefer these kinds of loans because of the fact that the interest that is paid on them is often 100% tax deductible. A home equity loan is a type of loan in which the borrower uses the equity of his or her home as collateral. Home equity loans are often used to finance major expenses such as home repairs, medical bills, or college education. The home equity loan then creates a lien on the borrower’s house thereby reducing the home equity.
What is a Home Equity Line of Credit (HELC)?
A Home Equity Line of Credit, also known as a “HELC” or “HELOC” is essentially a line of revolving credit which consists of an adjustable interest rate. You can obtain the funds when needed and only pay interest on the money borrowed. In comparison, a Home Equity Loan provides the homeowner with the full amount of the loan. With a HELOC, a homeowner is able to select when to borrow against their equity in their property. The lender establishes a limit to the credit amount which is determined on criteria similar to that used with closed end loans. Similar to the closed-end loan, it is entirely possible to borrow as much of an amount which is equal to the home value, subtracting any liens of course. Traditionally, 30 year repayments are offered at a variable rate of interest. Some lenders also allow the payment of interest only, and the rate is determined by the prime rate plus a margin.
What do I need in order to qualify for an HEL?
You will need the following: A credit score of at least 620; a long history of responsible credit use; verifiable income; and equity in your home.
How much can I borrow?
The amount of money you can borrow is limited by how much equity you have in your home, as well as how good your credit score and income are.
How can I figure out how much equity I have in my house?
This is pretty simple. All you have to do is subtract all the debts secured by your home from your house’s estimated market value. (Your mortgage is included in the debts secured by your home.) So, if you have a house worth $150,000 and you owe $100,000, you will have $50,000 in equity.
How do I figure out the current market value?
All you need to do is compare similar homes in your neighborhood. You can also use eppraisal.com to get a good home equity estimate.
What can I use a HEPL for?
You can use HEPLs for just about any purpose that a personal loan could be used for. Some use it for home improvements. Others use it to pay student loans or weddings. Even more have used them to pay medical bills or consolidate debt. It’s all up to you!
What fees are involved with Home Equity Personal Loans?
There aren’t application fees, but there will be closing fees associated with the loan. If you live in states that charge a mortgage tax, you may also have additional fees to deal with. Lenders might also charge you a fee if you’re late on a payment, or have insufficient funds.
What kind of homes can be used as collateral for HEPLs?
The home that is your primary residence is the only home you can use as collateral. Single family homes, condos, and planned unit developments are all eligible. However, vacation homes, multifamily homes, and trusts aren’t.
How long does the lending process take?
Since this is a more traditional style of loan, the process is a bit longer than other alternatives. From start to closing, the entire process will take about 4 weeks.
I wanna pay my loan early.
Awesome! There are no prepayment penalties, so have at it!
Can I automatically deduct my payments?
Absolutely.
This sounds like a traditional loan. What’s the closing like?
It’s a lot easier than you think. Once you’ve been approved and accepted the offer lenders give you, a notary will meet up with you at the location of your choice and get you to sign the documents. You will have 3 days of “breathing time” to decide whether or not you want to cancel the loan. You will receive the cash you borrowed on the 4th day after signing.
Do I need an attorney’s assistance?
It’s never harmful to speak with an attorney regarding personal and business matters, and often times, it may be the best thing you can do if you think that an attorney’s advice can help you. Although we aren’t a law firm and we cannot provide anyone with any legal advice, you are more than welcome to speak with an attorney that we use for our company. We truly want to get familiar with our clients, and help them in any way we can. Simply send an email to info@thecreditexpress.org and we’ll be sure to forward it.
Still need help? If you have a question that isn’t answered here, or if you feel like you could use advice when it comes to the best route of financing for your personal needs, we are here to help you make the best choice! You may call us at (678) 983-4555 or email: info@thecreditexpress.org. You’re also more than welcome to visit our office. Evening and weekend appointments are available.