Home Equity Financing Options - Should You Get a Home Equity Loan?

Tip! Don't just settle for low home equity loan interest rates when comparing home equity lenders. Lenders that offer low interest rates tend to have stiffer terms.

If you own a home, your options for tapping into your equity are numerous. Some homeowners choose to refinance their home and cash-out at closing. This may serve a two-fold purpose. You are able to lower your interest rate, while acquiring a lump sum of money. Those who want access to emergency cash may opt for an equity line of credit. However, if you are not interested in refinancing, but need extra cash, a home equity loan may be the perfect choice.

What is a Home Equity Loan?

A home equity loan is very similar to personal bank loans. However, unlike personal bank loans which are difficult to qualify for, you may get an equity loan with good or bad credit. Lenders are more eager to approve a home equity loan because the funds are secured by the property. Thus, if you have a low credit score, you may obtain a loan. Of course, a low credit score may result in a higher mortgage rate.

When to Get a Fixed Rate Home Equity Loan?

Before applying for a home equity loan, carefully consider the advantages and disadvantages. A home equity loan is a second mortgage. Instead of paying one monthly mortgage, you are now responsible for two mortgage payments. The second mortgage is generally cheaper, thus easier to payoff.

Home equity loans are ideal for consolidating or eliminating high interest credit card debts. This way, you are able to pay off your consumer debt at a low fixed rate, and within a specified time frame. Home equity loans are also useful when you have a large expense.

When to Avoid Home Equity Loans?

While home equity loans are very tempting, avoid applying for a loan if you cannot afford another bill. In some cases, a second mortgage may improve your finances. By consolidating credit card debt, you may save money each month. However, if you are having a difficult time paying creditors on time, do not get a home equity loan. More than likely, you will also struggle to pay back the second mortgage. Thus, you are placing yourself at risk for losing your home.

Here are our Recommended Home Equity Loan Companies Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.

Home Equity News:

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Home equity loans drying up for some - Business - Personal finance ...
Like many homeowners during the housing boom, Lynnette Madden and her husband decided to open a home equity line of credit about a year and a half ago as ...
Americans' home equity near a record low - Business - Real estate ...
WASHINGTON ? Falling U.S. home prices have shrunk equity so much that the proportion of their homes that Americans actually own is near its lowest point ...
Home equity lines have dried up across U.S. - Business - Personal ...
Home equity lines have dried up across U.S. As home prices collapse, banks cut off credit, further souring the economy Below:
Late payments for home equity loans rise - Business - Real estate ...
WASHINGTON ? 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 ...
Retirees no longer count on home equity - Business - Personal ...
Many Americans have recently found themselves changing retirement plans after losing a substantial amount of home equity as the housing market and the ...
Equity in Americans? homes falls to historic low - Business ...
NEW YORK ? The equity Americans have in their most important asset ? their homes ? has dropped to its lowest level since the end of World War II ...
Students get creative to pay off loans - Business - Personal ...
Lines of credit typically work like a credit card, with a limit and a revolving balance: the average home-equity line of credit currently has an interest rate ...
Use of home equity hits a four-year low - Business - Real estate ...
Use of home equity hits a four-year low Freddie Mac report cites falling residence values, stricter lending standards Below:
Ford, Toyota are pinning their hopes on China - Business - Autos ...
NEW YORK ? Ford Motor Co. plans to build a new assembly plant in China ... $30K home equity loan FICO: 5.75%
Cities sue, invest to stop foreclosures - Business - Real estate ...
These stem from lost tax revenue and jobs as well as slower consumer spending that come with home equity declines, and don?t even include the financial toll ...

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