Welcome to Mortgage Guide and Tips
Equity Home Loan Loan Mortgage Refinancing Article
. You may Bookmark this article or link to it permanently - ,click here.
Home Equity Loan
********An extremely popular and efficient way to borrow is using the roof over one’s head as collateral for sizable amounts of credit. To define a few terms, equity is the difference between your home’s appraised – or fair market – value and your outstanding mortgage balance. A loan refers to the amount of money you borrowed from a lender providing you with the mortgage. So basically, the idea with home equity loans is to borrow against your home’s equity as a very effective way to get some things you need at a good price.
Why Home Equity Loans are popular
To be sure, borrowing against the value of a home has become increasingly popular. Why, you ask. There are two key reasons for this surge: low interest rates and tax deductibility.
The tax changes that occurred in 1986 have eliminated deductions for most consumer purchases. As a way to get around these changes in tax, consumers began borrowing up on their home value in order to make purchases. Home equity loans thus became a method adopted by homeowners to buy goods and still get a deduction.
For instance, let’s say that you bought your home for $95,000 and made a 20 percent down payment of $19,000. To pay the remaining $76,000, you then took a first mortgage. On the day you closed on your home, you automatically had 20 percent equity. As you pay off the principal, you gain equity and your home grows in value.
Now, let’s say that you have paid $12,000 toward the principal and your property. Remember that you property was valued at $95,000 when you bought it. Now, since you have made the payment on your principal, your $95,000-home is now worth $115,000. Your beginning equity ($19,000), plus the principal you have paid ($12,000) and the increase in your property value ($20,000) gives you $51,000 in equity.
Home Equity Loans: Equity as a Valuable Asset
Banks and borrowers both benefit from home equity loans. The reason for this is that equity is a valuable asset to have. You can put it to use without having to sell your home. And because most people’s domicile is their biggest asset, lenders regard home equity loans as secure. For that reason, interest rates for home equity loans are lower than for other loans.
Who are the best borrowers of Home Equity Loans?
Earlier in the article, we have made mention that home equity loans are beneficial to both the lender and the borrower. However, like all things, home equity loans also have their downsides. The disadvantage to home equity loans is that if you default on the loan, the lender could foreclose on your home. For this reason, home equity loans are statistically most suited to stable, middle-aged borrowers.
TOTAL WORD COUNT - 462
KEYWORDS "Home Equity Loan" = 13 (density = 2.8%)
Equity Home Loan Loan Mortgage Refinancing Specific links
Equity Home Loan Loan Mortgage Refinancing News
Obama proposes home loan refinancing plan
Obama proposes home loan refinancing plan
Read more...Obama proposes new home loan refinancing plan
The Obama administration on Wednesday detailed its latest plan to help millions of homeowners refinance their mortgages to today's historically-low rates.
Read more...Mass Refi Plan Would Hit Pensions While Easing Mortgage Payments
Like many homeowners, Vicky Kovari and her husband want to refinance their mortgage. A lower interest rate would save them hundreds of dollars a month -- and it would cost them, too.
Read more...Security America Mortgage, Inc. Announce the New Sponsorship of Affordable VA Loan Calculations, Lowering Mortgage ...
Security America Mortgage, Inc. tells military veterans in Austin how they can still offer the lowest VA Mortgage Loan Rates in Texas by highlighting the new 2012 Calculation changes allowing them to do just that.Houston, Austin, San Antonio, Dallas, TX (PRWEB) January 20, 2012 As of January 1, 2012, the Department of Veteran Affairs changed a few of their standards for how calculations can be ...
Read more...First Person: Refinancing My Mortgage for the Right Reasons
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
Read more...To pay for your kid's college, HELOC or refi?
Dear Dr. Don,Is it better to finance my two children's college through a home refinance or by taking out an equity line of credit? What are the tax advantages/disadvantages of the two options? If I take ...
Read more...Mortgage Relief Plan Aims at Refinancing
President Obama said a new package of legislation would make it easier for millions of homeowners to refinance at today’s historically low interest rates.
Read more...