A home equity loan(also known as a second mortgage) is a secured loan where homeowners borrow money from a bank or lender using their home as collateral. They get a certain amount of credit based on the amount of equity in their homes and then use that to make purchase real estate properties, home improvements, debt consolidation, pay for major expenses and life events etc. If you trying to make a big life change but need a financial help, a home equity loan can help you reach your goals.
Home equity loans are attractive to both borrowers and lenders. Here are a few of the key benefits for borrowers:
1. Easier To Qualify:
With all the financing choices out there it can be challenging to find the right loan or credit option for your situation. Home equity loans may be easier to qualify for if you have bad credit. As your home securing the loan, lenders have a way to manage their risk.
2. Lower Interest Rates:
Home equity loans typically have a lower interest rate than unsecured loans such as credit cards and personal loans. This type of loan is considered “secured” by the collateral of your home, so lenders are more confident in your ability to pay your debt. Lower risk means lower rates.
3. Large Amounts:
If you have significant equity in the home, you can qualify for relatively large loans with home equity loans. For large expenses like home improvements, higher education, or starting a business, your home equity may be the only source of funding available.
4. Cash Payment:
A home equity loan provides a lump sum of money. This allows you to knock out medical bills, contractor costs or other major expenses with one check.
5. Potential Tax Deduction:
100% of your home equity loan interest payments may be tax deductible, which may not be the case with credit card debt. Consult your tax adviser to see if you qualify.
Flexibility is the most attractive benefit of this type of loan. Home equity loans offer homeowners flexibility in how they spend their money. Homeowners can draw on their home equity line anytime or simply leave their home equity line of credit untapped. They only need to make payments on their home equity lines of credit when they use it, much like with a typical consumer credit card. This is the best choice for those who need ongoing access to their funds.
One of the many appealing features of home equity loans is its stability. When you qualify for a home equity loan, the entire sum of the loan is available for you to use, and you’ll repay it at a fixed-interest rate. This makes it very convenient for you to manage your funds. Once homeowners take out a home equity loan, the money is theirs. They simply have to make their monthly payments on time to pay it back. However, lenders can cancel a home equity line of credit or reduce its size whenever they want, as long as they provide proper notice to their clients.
The Bottle Line:
If your home is worth more than you owe on it, a home equity loan can offer funds for anything you want. You don’t just have to use the money for home-related expenses but can also use any of your financial needs. If you’re planning to tap your home equity, please feel free to contact Magna Capital Group, Inc. today and speak with one of our expert representatives at (310) 734 4044 or email at firstname.lastname@example.org.