A home equity loan is a great way to borrow money if you know how to pick a reliable lender that can provide fair home equity loan rates. People take out a home equity loan to borrow money for all sorts of things: debt consolidation, home improvement projects, medical bills, and more. While a home equity loan can be a great way to borrow money, keep in mind that you are putting your house at stake. If the home equity loan is too expensive, you could end up losing your house. This guide will provide you with valuable unbiased home equity loan information that will teach you how to find the best home equity loan available.
Must-know Home Equity Loan Information
Know your credit score. By getting your credit score and credit report, you will have a powerful bargaining tool that can help you to negotiate with lenders in order to receive the best possible home equity loan rates. Many times, homeowners with great credit are charged high fees because they are simply unaware of how good their credit scores are. Make sure to get this information before searching for home equity loan information.
If you are using a home equity loan to consolidate credit card debt, use caution. Many homeowners believe that getting a home equity loan is a good way to pay off credit card debt they have accumulated. If the home equity loan rates are good enough, then this option may be a good choice. However, if something happens and you are unable to make the home equity loan payments, your house is at risk. Remember, credit card companies cannot foreclose on your house if you fail to pay your bill. But if you cannot make payments on your home equity loan, you could lose your house.
Shop around for the best home equity loan rates. Make sure you contact several brokers before making a final decision about your home equity loan. By shopping around you can find the best home equity loan rates available and save considerable amounts of money. You can start looking for a reliable lender by contacting local banks, credit unions, or mortgage companies. Make sure you educate yourself on the various home equity loan options you have at your disposal.
Shop around for the best home equity loan rates. Make sure you contact several brokers before making a final decision about your home equity loan. By shopping around you can find the best home equity loan rates available and save considerable amounts of money. You can start looking for a reliable lender by contacting local banks, credit unions, or mortgage companies. Make sure you educate yourself on the various home equity loan options you have at your disposal.
Pay careful attention when closing your home equity loan. Make sure you read every word of every paper you sign. If you are not confident in your ability to determine whether or not the contract is fair, ask a lawyer or trusted friend to review the documents for you. Ask questions about anything you don't understand and make sure your broker explains all of the relevant fees to you. Take your time before signing and don't be rushed into closing the deal.
If something goes wrong, get legal help. If you are suddenly being charged hidden fees or are forced into a situation where you must invest in credit insurance, report the situation immediately. By contacting your local consumer protection office, you may be able to find legal help that can get you out of your loan.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1042&p=mtg101
Thursday, August 23, 2007
Debt Consolidation Loan
If you are stressed by the sheer number of bills you receive each month, a debt consolidation loan may be a very useful tool. A debt consolidation loan gives you money to pay off your existing debt, resulting in just one monthly payment and a lot less stress. A debt consolidation loan makes it much easier to manage your budget since you only have to worry about a single payment schedule.
Secured Debt Consolidation Loan vs. Unsecured Debt Consolidation Loan
There are two types of debt consolidation loans: secured and unsecured. A secured debt consolidation loan may allow you to find lower interest rates and borrow more because they are backed up by something that holds high value: usually your home. An unsecured debt consolidation loan does not have anything valuable backing them, and therefore are considered more risky than a secured debt consolidation loan. An unsecured debt consolidation loan often come with a list of restrictions on what the money you borrow can be spent on.
The number one factor that will determine how much your debt consolidation loan costs is your credit score. If you have poor credit, you may have trouble finding a debt consolidation loan with low interest rates. However, by making payments on time, you can help improve your credit score.
Getting a Debt Consolidation Loan if You Have Bad Credit
While many lenders will not give a debt consolidation loan to people with poor credit, some lenders specialize in working exclusively with these types of situations. Generally, poor credit scores will mean higher interest rates and strict limitations on spending. While these may seem like unattractive qualities, the benefits of getting your debt consolidated and paid off outweighs the extra money you may be forced to spend.
Finding a Debt Consolidation Loan
While there are now a huge selection of lenders to apply for a debt consolidation loan from, this also means you must be cautious before signing anything and make sure you understand all the terms of your debt consolidation loan. Never be rushed into signing anything without fully understanding the contract first. If you cannot determine whether the paperwork is fair or not, enlist the services of a lawyer who can review the documents for you.
There are a host of companies that are internet-based which now offer the entire process of debt consolidation from the convenience of your personal computer. Use the internet to shop around for different interest rates and try and find the best debt consolidation loan for you. Not only does the internet make it easier to get many quotes from many sources, most online companies also have an application right on their web site that makes it very easy to apply for a debt consolidation loan.
If you are not confident in your ability to locate a good debt consolidation loan, consider hiring a broker that will perform the search for you. A debt consolidation loan broker will sort through hundreds of lenders to find debt consolidation loans that are right for your situation.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1044&p=mtg101
Secured Debt Consolidation Loan vs. Unsecured Debt Consolidation Loan
There are two types of debt consolidation loans: secured and unsecured. A secured debt consolidation loan may allow you to find lower interest rates and borrow more because they are backed up by something that holds high value: usually your home. An unsecured debt consolidation loan does not have anything valuable backing them, and therefore are considered more risky than a secured debt consolidation loan. An unsecured debt consolidation loan often come with a list of restrictions on what the money you borrow can be spent on.
The number one factor that will determine how much your debt consolidation loan costs is your credit score. If you have poor credit, you may have trouble finding a debt consolidation loan with low interest rates. However, by making payments on time, you can help improve your credit score.
Getting a Debt Consolidation Loan if You Have Bad Credit
While many lenders will not give a debt consolidation loan to people with poor credit, some lenders specialize in working exclusively with these types of situations. Generally, poor credit scores will mean higher interest rates and strict limitations on spending. While these may seem like unattractive qualities, the benefits of getting your debt consolidated and paid off outweighs the extra money you may be forced to spend.
Finding a Debt Consolidation Loan
While there are now a huge selection of lenders to apply for a debt consolidation loan from, this also means you must be cautious before signing anything and make sure you understand all the terms of your debt consolidation loan. Never be rushed into signing anything without fully understanding the contract first. If you cannot determine whether the paperwork is fair or not, enlist the services of a lawyer who can review the documents for you.
There are a host of companies that are internet-based which now offer the entire process of debt consolidation from the convenience of your personal computer. Use the internet to shop around for different interest rates and try and find the best debt consolidation loan for you. Not only does the internet make it easier to get many quotes from many sources, most online companies also have an application right on their web site that makes it very easy to apply for a debt consolidation loan.
If you are not confident in your ability to locate a good debt consolidation loan, consider hiring a broker that will perform the search for you. A debt consolidation loan broker will sort through hundreds of lenders to find debt consolidation loans that are right for your situation.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1044&p=mtg101
Refinance To Build Equity Faster
Many borrowers use a refinance to shorten the term of the mortgage. And brace yourself, even at low rates, a shorter term means a higher monthly payment. The benefit is that you'll build up equity faster and pay far less in total interest over the life of the loan.
Consider Jim Neill, 48, a real estate broker and his wife Merrilyn, 55, a psychotherapist. Recently, the couple took out a 15-year fixed rate loan at 6.75% to replace an 8.13% ARM with a 30-year term. Their monthly payment jumped by $200, but now they will own their own home outright by the time they retire. In addition, the total interest on the 15-year loan will come to $95,447, vs. $222,234 on the remaining life of the ARM -- and that assumes their adjustable rate would have held steady at its current 8.13%. "This is forced savings," says Jim. "When we retire, we can scale down and take equity out of the house."
If you can't afford the payments on a 15-year mortgage, your next best means of building equity is to refinance for less than 30 years. To do so, ask your mortgage company to customize your new loan's term to match the years that are left on your old loan -- if you are five years into a 30-year mortgage, for example, ask for a 25-year loan.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1119&p=mtg101
Consider Jim Neill, 48, a real estate broker and his wife Merrilyn, 55, a psychotherapist. Recently, the couple took out a 15-year fixed rate loan at 6.75% to replace an 8.13% ARM with a 30-year term. Their monthly payment jumped by $200, but now they will own their own home outright by the time they retire. In addition, the total interest on the 15-year loan will come to $95,447, vs. $222,234 on the remaining life of the ARM -- and that assumes their adjustable rate would have held steady at its current 8.13%. "This is forced savings," says Jim. "When we retire, we can scale down and take equity out of the house."
If you can't afford the payments on a 15-year mortgage, your next best means of building equity is to refinance for less than 30 years. To do so, ask your mortgage company to customize your new loan's term to match the years that are left on your old loan -- if you are five years into a 30-year mortgage, for example, ask for a 25-year loan.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1119&p=mtg101
Refinance To Build Equity Faster
Many borrowers use a refinance to shorten the term of the mortgage. And brace yourself, even at low rates, a shorter term means a higher monthly payment. The benefit is that you'll build up equity faster and pay far less in total interest over the life of the loan.
Consider Jim Neill, 48, a real estate broker and his wife Merrilyn, 55, a psychotherapist. Recently, the couple took out a 15-year fixed rate loan at 6.75% to replace an 8.13% ARM with a 30-year term. Their monthly payment jumped by $200, but now they will own their own home outright by the time they retire. In addition, the total interest on the 15-year loan will come to $95,447, vs. $222,234 on the remaining life of the ARM -- and that assumes their adjustable rate would have held steady at its current 8.13%. "This is forced savings," says Jim. "When we retire, we can scale down and take equity out of the house."
If you can't afford the payments on a 15-year mortgage, your next best means of building equity is to refinance for less than 30 years. To do so, ask your mortgage company to customize your new loan's term to match the years that are left on your old loan -- if you are five years into a 30-year mortgage, for example, ask for a 25-year loan.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1119&p=mtg101
Consider Jim Neill, 48, a real estate broker and his wife Merrilyn, 55, a psychotherapist. Recently, the couple took out a 15-year fixed rate loan at 6.75% to replace an 8.13% ARM with a 30-year term. Their monthly payment jumped by $200, but now they will own their own home outright by the time they retire. In addition, the total interest on the 15-year loan will come to $95,447, vs. $222,234 on the remaining life of the ARM -- and that assumes their adjustable rate would have held steady at its current 8.13%. "This is forced savings," says Jim. "When we retire, we can scale down and take equity out of the house."
If you can't afford the payments on a 15-year mortgage, your next best means of building equity is to refinance for less than 30 years. To do so, ask your mortgage company to customize your new loan's term to match the years that are left on your old loan -- if you are five years into a 30-year mortgage, for example, ask for a 25-year loan.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1119&p=mtg101
Cash Out Refi - Get Your Hands on Some Cash
Another way to make a refinance work for you is to refinance for more than the balance remaining on your old mortgage -- in effect, tapping your home equity, or "cashing out," in mortgage speak. Thanks to favorable rates, you may be able to do so without boosting your monthly outlay. For example, at 8.5%, the payment on a $200,000, 30-year fixed rate mortgage is $1,538. But at 7.5%, that same payment lets you borrow nearly $20,000 more.
The best use for the extra cash is to pay off any higher rate loans you may have. Let's say that you are carrying a $15,000 car loan at 10% and making minimum payments on a $10,000 credit card balance at 17%. Your monthly payments on those debts would total $680. Then assume you refinanced your mortgage, taking out an additional $25,000 to pay off your car and credit card loans. Result: At 7.5%, your additional monthly mortgage payment would total only $175, so you would come out $505 ahead ($680-$175=$505).
Of course, all the extra cash needn't go for paying off debts. When the Menards swapped their ARM for a fixed rate last December, they also increased their mortgage load by $34,000, from $106,000 to $140,000. They used $3,000 of the proceeds to pay their refinancing costs and another $17,000 to pay off a 10% home equity loan, which had been costing them $250 a month. Then they spent the remaining $14,000 to build a garage for Roger's antique car collection -- and they did all this for just another $19 a month.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1118&p=mtg101
The best use for the extra cash is to pay off any higher rate loans you may have. Let's say that you are carrying a $15,000 car loan at 10% and making minimum payments on a $10,000 credit card balance at 17%. Your monthly payments on those debts would total $680. Then assume you refinanced your mortgage, taking out an additional $25,000 to pay off your car and credit card loans. Result: At 7.5%, your additional monthly mortgage payment would total only $175, so you would come out $505 ahead ($680-$175=$505).
Of course, all the extra cash needn't go for paying off debts. When the Menards swapped their ARM for a fixed rate last December, they also increased their mortgage load by $34,000, from $106,000 to $140,000. They used $3,000 of the proceeds to pay their refinancing costs and another $17,000 to pay off a 10% home equity loan, which had been costing them $250 a month. Then they spent the remaining $14,000 to build a garage for Roger's antique car collection -- and they did all this for just another $19 a month.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1118&p=mtg101
ARM Refi - Trade Your ARM for a Fixed Rate
ARM Refi - Trade Your ARM for a Fixed Rate
By switching to a fixed rate loan, you will not only reduce your payment, you will also likely lock in an attractive rate for as long as you own your home.
In fact, while one year ARMs currently offer tempting introductory rates averaging 5.59%, most experts recommend avoiding them, because you could easily find yourself facing sharply higher payments in the near future, even if interest rates don't rise. Why? Well, after the introductory rate expires, ARMs are typically pegged to the one year Treasury rate (recently 5.25%) plus 2.75 percentage points, with increases of as much as two points a year. Assuming interest rates don't change, you would pay 7.59% in the second year (the full two point increase) and 8% in the third year.
There are certain cases, however, where an ARM makes sense. If you are fairly certain you'll be moving within five years, you can save some money -- and avoid rising payments -- with a five year ARM, recently averaging 6.62%. Such loans offer a fixed rate for five years and adjust annually thereafter.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1117&p=mtg101
By switching to a fixed rate loan, you will not only reduce your payment, you will also likely lock in an attractive rate for as long as you own your home.
In fact, while one year ARMs currently offer tempting introductory rates averaging 5.59%, most experts recommend avoiding them, because you could easily find yourself facing sharply higher payments in the near future, even if interest rates don't rise. Why? Well, after the introductory rate expires, ARMs are typically pegged to the one year Treasury rate (recently 5.25%) plus 2.75 percentage points, with increases of as much as two points a year. Assuming interest rates don't change, you would pay 7.59% in the second year (the full two point increase) and 8% in the third year.
There are certain cases, however, where an ARM makes sense. If you are fairly certain you'll be moving within five years, you can save some money -- and avoid rising payments -- with a five year ARM, recently averaging 6.62%. Such loans offer a fixed rate for five years and adjust annually thereafter.
http://www.mortgage101.com/Articles/Refinance.asp?ArticleID=1117&p=mtg101
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