Home Equity

A Few Advantages of Home Equity Loans and Lines of Credit

There are several reasons why your home is a good source of funding. These are outlined below. However, we must caution that home equity loans and lines of credit are secured by your home. If you default, you are at risk of losing your home to foreclosure and reposession. So, it is vital that you be able to make the required payments, on time. If you are living on a fixed income and have no other liquid assets, this form of borrowing can be risky. If you fail to make timely mortgage payments, you can lose your home ant there may be better options available to you.

Here are some of the primary advantages of home equity funding.

1) Conventional home equity financing is readily available from most mortgage lenders: That is, most banks, credit unions, savings and loan associations, and other mortgage lenders offer home equity financing. It's easy to shop for.

2) With a line of credit, you have convenient access to loan funds:

Most home equity lines of credit are accessed with checks or a credit card. This makes access to the funds easy and convenient. You present the check or card in the same manner that you would present any other check or card. The lender extends the funds and adds the amount to your principal balance. (Note: Home equity loans do not have this feature. When you obtain a home equity loan, the lender transfers the entire loan amount to you at the loan closing. When you obtain a reverse mortgage, you typically receive monthly disbursements in a fixed amount.)

3) Generally, interest payments on loans secured by your home are tax deductible, but there are some limitations. Talk to your tax assistant or a CPA.

4) Lenders typically offer better interest rates for this type of financing than they do for other, unsecured types of personal loans. In most cases, you'll be able to borrow an amount equal to 80 percent of the value of your equity considering that many credit cards and personal loans have interest rates in excess of 12%, and home equity loans are often below 9%, you can save thousands of dollars in interest alone over the life of the loan. Do the math, and make sure you are being offered what you deserve and clearly understand the payment terms before you sign the dotted line.

5) This is an excellent source of money in retirement. If you are retired or simply need extra money, and own a home, you may be able to get the cash you need by accessing the equity in your home.

Direct Lending Solutions is a credit resource designed to help consumers learn about a variety of financing options available to them. For more information about home equity loans, we also recommend the website to the United States Federal Reserve at http://www.federalreserve.gov/pubs/equity/equity_english.htm.

Home Equity News:

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Home equity loans drying up for some - Personal finance- msnbc.com
Some homeowners are finding that even with great credit and 20 percent or more home equity, getting a line of credit on that equity can be difficult or impossible.
Equity in Americans? homes falls to historic low - Mortgage Mess ...
And homeowners? percentage of equity has declined steadily even as home values surged during the housing boom due to a jump in cash-out refinancing, home equity loans and an ...
Use of home equity hits a four-year low - Real estate- msnbc.com
The amount of money Americans pulled out of their homes is at a four-year low as homeowners battle falling home values and stricter standards among lenders, Freddie Mac said ...
Late payments for home equity loans rise - Real estate- msnbc.com
Late payments on home equity loans climbed to a 1½-year high in the opening quarter of this year, while delinquencies on credit card bills fell, painting a mixed picture of how ...
Morgan Stanley to freeze home-equity lines - Mortgage Mess- msnbc.com
Morgan Stanley told thousands of clients this week that they will not be allowed to withdraw money on their home-equity credit lines, according to a news report.
Late payments rise on home-equity loans - Stocks & economy- msnbc.com
Late payments on certain auto and home equity loans climbed in the final quarter of last year, while delinquencies on credit card bills largely held steady, suggesting some U.S ...
Should I get a home equity credit line? - Answer desk- msnbc.com
Free money In this week's video Answer Desk, msnbc.com's John W. Schoen has some advice on how to avoid giving the government more of your money than you need to.
How to tell if now is the time to refinance - Personal finance- msnbc ...
You have at least 10 percent equity in your home and aren?t FHA-eligible. To get good rates, you?ll need to have equity in the home. In most markets, 10 percent equity is a ...
Retirement Calculator - Cracked Nest Egg - MSNBC.com
See today's average home equity rates across the country.
The New Yorker: When owning isn?t better - The New Yorker- msnbc.com
The problem was exacerbated by an explosion in home-equity loans, fuelled by our faith that house prices can only rise. According to a recent study by the Federal Reserve ...

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