Debt Consolidation: Is Borrowing Against Your Home Equity Worth The Risk?
June 11th, 2008Debt consolidation is taking place number one on many home owners’ agenda these days. Many people are resorting to borrowing against their home equity for number of reasons.
One of them is lower interest rates on home equity loans than on credit cards. Home equity loans (HEL) or home equity line of credit (HELOC) are also relatively easy to obtain. Under certain circumstances lenders will even let you borrow on your home equity if your credit rate is less than perfect.
All these factors make borrowing against your home a very attractive idea when it comes to debt consolidation.
By choosing this route you might eliminate the interest rates quite a bit as well as pay less in your monthly installments which releases a lot of financial stress of your household. The most important thing to remember is - are doing this for all the right reasons or not?!
Erasing your debt by borrowing against your home can either be a relief or a way to dig yourself in debt even deeper. How you might ask? Listen to this: n estimated 5,500 households a day used equity loans to pay off an average of $6,500 in card balances in 1996 and 1997 alone. Some people stop right there, but many don’t. They simply turn around and charge their credit cards right up all over again, thus, ending up where they started
Find out more information about borrowing against your home equity.
Home equity loan advice from:
Lowest Rates Home Equity Loan
Debt Consolidating Tips
May 28th, 2008A very challenging area for many households is - debt consolidating. There are many different ways you can go to consolidate your debts. One of them is borrowing against your home equity to pay off your debts.
Some people consider it a good choice but there are some extremely important points you should consider before choosing this path.
The interest rates on your home equity loan (HEL) could be lower than the ones on your credit cards provided you did a good job researching information about how to get the lowest home equity loan possible (an online research will provide you with plenty of great choices to consider)
Here are some important questions you should ask yourself while considering debt consolidation with a home equity loan: What is the actual reason for your debt consolidating decision? Are you trying to bring the interest rates to the minimum? Or are you doing it so that you can keep borrowing more unable to cut down on your spending habits? Spending more than you can afford is a very dangerous habit. If you are applying for a low rate home equity loan to consolidate your debt for the wring reason, this can cause you tremendous trouble: losing your home.
Be sure that you make all your financial decisions wisely!
Home equity loan advice from:
Lowest Rates Home Equity Loan
Borrowing Against Your Home - Bring HEL Risks To Minimum
May 28th, 2008While borrowing money against your home (Home Equity Loan or HEL) is not that difficult, there are few things to consider. Here are some of them:
1. Before singing any final papers, do a thorough research in order to find the lowest rates on your home equity loan.
The easiest and quickest way to do this would be online. The wast majority of loan companies and banks have their websites where they give away important information about HEL conditions and rates. Research as many of them as you can and make a spreadsheet where you put all the important information you have collected. Then it would be much easier to decide which lender to choose and how to get the lowest rates for home equity loan.
2. Another extremely important aspect of borrowing against your home or property is protecting yourself from the risks or borrowing HEL.
You need to know that when you borrow against your house, you will have to repay the debt as well as the interest rates. Make sure that you secured your future against HEL pitfalls by saving certain amounts of money regularly.
It might seem like monthly payments will not be much of a burden on your family budget right now. But what if you lose your job? Or what if your family expenses increase unexpectedly in the future?
There are much more of circumstances that might put your regular HEL payments at risk. It is very wise to prepare yourself financially rather than suffer the consequences of not paying back your debt, which could result in the loss of your home.
Home equity loan advice from:
Lowest Rates Home Equity Loan
Are the Costs of “No Cost” Refinancing Worth It?
December 2nd, 2007by Craig Romero
Homeowners looking to refinance are being hit with the option of “no cost” refinancing. It is extremely appealing to homeowners who do not have the cash on hand to pay the costs of conventional refinancing or refinancing through an upfront mortgage broker.
But does “no cost” refinancing actually come with no cost to the borrower? Not always. When the big picture is taken into account, some “no cost” refinancing actually has costs that are pretty steep, but well hidden. Most no cost financing options will have you paying ½ a point to 5/8 of a point more in interest than you would with a full-cost loan.
Is there ever a good reason to take advantage of a “no cost” refinance? Yes, if the interest rate you are paying now is significantly lower than the current “no cost” refinance rates. You may also want to consider this type of financing if you plan on being in the house for a short period of time, say from one to three years.
If you are not sure how long you are going to be in your home, it is still okay to pursue a no cost loan, and if you wind up staying in the home for a long period of time, you can refinance at a later date.
For borrowers who are considering a no cost refinance because they can not afford the costs to refinance, dig a bit deeper. Many times when you refinance you can roll the costs of your refinance into your loan, enabling you to refinance without a large amount of money up front.
If you do decide to opt for a no cost refinance, make sure that you are truly getting a no cost, and not a hidden cost. With a no cost loan, you will not be paying the lender fees or settlements; the lender pays for these without increasing the cost of your loan. You will however be responsible for per diem interest and escrow costs, though your escrow costs will be credited at closing by your old lender.
Written by Craig Romero
Discover how to quickly build a minimum of $40,000 worth of home equity and pay your mortgage off in 10 years or less without making biweekly mortgage payments. Visit: www.wisehomeinfo.com
iTulip Interviews James Scurlock, Creator of “Maxed Out”
December 2nd, 2007“Maxed Out” movie can be a real eye-opener for many people who do not hesitate before swiping their credit cards without thinking of bad debt consequences!’
Home equity loan advice from:
Lowest Rates Home Equity Loan
Borrowing against your home equity could be a very risky business
December 1st, 2007Getting a home equity loan, especially if you are fortunate enough to get the lowest rates for home equity loan is seemingly an easy financial operation. It looks very attractive for many home owners.
People often opt in for HEL especially for lowest rates home equity loan to finance various projects like home remodeling, paying off medical bills, higher education for their kids etc. Quite often they are used to consolidate debts.
This might sound as great idea, but according to the lates consumer loan survey more and more home owners in America are failing to make timely payments on their home equity loans. A seemingly “great idea” might very quickly turn into a financial disater. Every borrower should consider all the risks assosiated with borrowing against their home equity and work out a strategy to bring these risks to the minimum.
Your financial situation might look pretty stable at the moment, but there is no guarantie things will be the same in a year or two. You might loose your job for one reason or another, the value of your home might drop, your household expenses might increase dramatically. The truth is - no one expects these things to happen to them, but in reality they do happen. The question is - would you be able to deal with them while you are stuck with payments on your home equity loan for 10 or 20 years?
Home equity loan advice from:
Lowest Rates Home Equity Loan
Home Equity Line Of Credit (HELOC) - Avoid These Pitfalls:
November 24th, 2007If you consider applying for a home equity line of credit make sure you understand every single detail before getting into any financial obligations. Not doing your homework might cost you dearly down the road.
HELOC can be risky because this is a variable rate debt. If there is no need to keep borrowing smaller sums of cash over a long period of time, it is recommended to rather opt for fixed rates home equity loan.
It is not recommended to borrow the maximum amount on your HELOC. Since the total allowed amount is based on 80% of the value of your home minus your mortgage balance, if your home value drops and you fail to meet your financial obligations, your home will be taken away from you. In such case even selling your house will not help to cover your debt.
Be aware that banks will try and make money even when you are NOT borrowing anything. This is called “inactivity fees“. Make sure to select a home equity line of credit that will not charge you for that.
Be aware of the fact that some HELOCS offer lower initial interest fees. This is a great option, but make sure you plan ahead to pay more each month when their regular rates kick in.
Home equity loan advice from:
Lowest Rates Home Equity Loan
Different Kinds Of Home Equity Loans
November 21st, 2007There are two kind of home equity loan: a conventional home equity loan and home equity line of credit.
When you get a conventional home equity loan, you receive the whole borrowed amount at once. With the home equity line of credit (HELOC), the borrower can use smaller sums as needed (same as other lines of credit). Borrower is paying back small monthly installments (interest) plus whatever small amounts on principal on their own pace.
At the end of the draw period the borrower will have to pay back the whole amount borrowed (a balloon payment).
Home equity loan advice from:
Lowest Rates Home Equity Loan
Lowest Rates Home Equity Loan (Part 3)
November 9th, 2007The lenders will also take a look at your loan to value ratio. The loan part is what you still owe to the bank on your mortgage and the value is what your house is worth on the market.
If you are making payments on your home regularly and this ratio is 80% or less, that means that you represent low risk to the lenders and you will be able to negotiate the lowest interest rates on your home equity loan.
Home equity loan advice from:
Lowest Rates Home Equity Loan
Lowest Rates Home Equity Loan (Part 2)
November 7th, 2007Second things banks are usually looking at is the information about your income. This is no different from the procedure you have to go through while applying for a mortgage.
It is illegal to hide or give misleading information about your income while applying for a home equity loan. Your lender would need this to determine if you are able to make your monthly payments. You will be asked to answer some job related questions like how long have you been at your current job position.
During the application process your debt to income ratio will also provide the information to your lenders about how much of your cash flow is tied up in paying off your current debts.
Home equity loan advice from:
Lowest Rates Home Equity Loan