Understanding Home
Equity Loans
As a homeowner, you may be able to borrow
against the equity in your home.
The equity is the difference between the
property's market value and the
outstanding loan balance. These types
of loans have become increasingly
popular because the interest rate is usually
lower when you borrow against
real estate.
Shopping For A Home Equity Loan
If you decide that the timing's right
for a home equity loan, ask your friends
or family for recommendations of lenders.
Then comparison shop. Comparing loan plans
will help you get a better deal.
Buyer Beware: Home Equity Scams
Do you own your home? If so, it's likely
to be your greatest single asset. Unfortunately,
if you agree to a loan that's based on
the equity you have in your home, you
may be putting your most valuable asset
at risk.
How Much Money Can You Borrow
on a Home Equity Credit Loan?
Depending on your creditworthiness (your
income, credit rating, etc.) and
the amount of your outstanding debt, home
equity lenders may let you borrow
up to 85% of the appraised value of your
home minus the amount you still owe
on your first mortgage.
What Is The Interest Rate on a
Home Equity Plan?
Interest rates for loans differ, so it
pays to check with several lenders
for the lowest rate. Compare the annual
percentage rate (APR), which
indicates the cost of credit on a yearly
basis. Be aware that the advertised
APR for home equity credit lines is based
on interest alone.
|
