When deciding between a Home Equity Loan against a Home Equity Line of Credit, first we need to determine what the money is being used for and how much money are we going to need. Generally, a HELOC (Home Equity Line of Credit) is a better choice for ongoing cash needs, such as college tuition payments or medical bills.

These are recurring debts. When you need a set amount of money for a specific, one-time purpose, such as buying a car or a major home renovation, then you want to consider a HEL (Home Equity Loan).

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Many people have heard about an equity loan called a Home Equity Line of Credit but are not really clear about what they are. They are a very common and popular type of loan than allows homeowners to draw on the growth in their homes and are usually referred to as a HELOC. A HELOC can give people the flexibility and convenience that is similar to a credit card account, but with much lower interest rates.

While a HELOC can be considered a type of home equity loan, it does have some unique features that make it a bit different. They also have some specific benefits that often make it the most attractive form of financing for people who have some growth in their homes.

Home equity is the value of the “unencumbered” portion of a homeowner’s property. In simple terms, it is the difference between the fair market value of your home and the balance of any mortgages that have been taken out against the home. If you have a home with a fair market value of $220,000 and the balance of all your mortgage loans is $120,000 in total, then you have a home equity value of $100,000 that you can borrow against to take out a borrowing off your house. (more…)

Among the most economical lending solution available today are home equity loans and home equity lines of credit. Depending on your personal financial situation, some of the interest can be used as a tax deduction. They are generally flexible and generally offer you the best rates available. There are a lot of advantages to a home equity loan. However, be sure to refinance with extreme caution.

There are two different types of home equity loans. The actual loan usually has a fixed rate with a precise period of time in which the loan needs to be paid off. Also fixed is the payment. This type of loan is ideal for someone who has a precise amount in mind. When consolidating your debts, such as student loans, credit cards, car loans or doing some home improvements, a homeowner will obtain a home equity loan to consolidate their entire payments inro one easy to pay bill. Often times, this creates a lower overall monthly payment.

A more flexible option is a home equity line of credit. This is an open ended loan meaning the payment and rate usually tends to be lower and is variable. A line of credit is generally used like a credit card, with tax benefits. Interest is only paid on the portion of the line you use. The rest is available for when and if you need it. Whenever you make a payment, that portion that is applied to the principle and is then available to use again if need be. Some lenders will offer a card for easier access. This option is great for when you do need to use the money immediately or would like to have the flexibility to keep using the money without going through the loan process over and over again. (more…)

I recently attended a real estate investment seminar in Las Vegas. Between speeches by different “gurus” I would mingle with other investors and explain that I owned a hard money brokerage firm.

Even though it has been around for almost a hundred years now, I was amazed how hard money lenders still seem to be mysterious to many investors. They either did not understand how the hard money lending industry worked or had heard that it was something they should avoid like the plague.

To put it simply, hard money loans are short term loans that are used for various real estate projects. The most common projects are house flipping, but they are also used in commercial construction and land development. Essentially, a hard money loan is often the best choice for money that is needed on a short term basis.

Unlike conventional financing, a hard money loan also known as a private loan originates from a private individual or institution unlike a bank. The loans are generally short term between 6 and 12 months and have a high, interest only payment generally between 10% and 14%. Another major difference between a hard money loan and a conventional loan is that a hard money loan is not based on a persons credit but instead on the value of the project after its completion. (more…)

Home equity loans are advertised on the airways, newspapers, magazines and just about anywhere else a homeowner may see or hear the advertisement. Some people feel that home equity loans are trouble waiting to happen.

Others feel that home equity loans are a key to opening a stronger financial picture and better home.

There is no simple answer to this question. The truth of the matter is that it will depend on you specifically. There are many financial advisors who believe having equity built in your home is equivalent to keeping your money under a mattress. The mattress, however, is non-liquid which means you cannot necessarily get at the money as soon as you need it. They believe that keeping money under a mattress results in your inability to make your money work for you, though they do acknowledge the minimal risk in keeping your equity in such a safe place.

These same advisors would have you consider taking out a home equity loan in order to invest the income. If, for example, you can find a relatively safe investment at a greater interest rate than you are paying on your loan than you will have your money working for you. If, obviously, the interest rate you are paying on your home equity loan is greater than the interest you are earning on the money in the investment than it does not make financial sense. (more…)

The most common type of home equity loan is the term loan. This loan is set for a fixed amount of time, anywhere from five to fifteen years. Such loans are typically granted for up to 80% of the value of the home, but some lenders will lend up to 125% of the home’s value.Is this type of loan right for you?

The term loan works best for those who need to borrow a fixed amount of money for a specific purpose – paying for a wedding, a home remodeling project, a fixed educational expense, or debt consolidation. This would give the borrower a fixed repayment schedule, where he or she would pay a set amount of money each month for a specific period of time. An increasingly popular alternative to the home equity loan is a line of credit. (more…)

A new report by the independent Demos group has revealed what may not be a surprise to many people – corruption is rampant in the home appraisal industry. The bust in the dot-com market of some five years ago has left would-be lenders with a surplus of cash to lend. This has led to a huge boom in both mortgage and home equity loan lending. That’s not a bad thing; a record 69% of Americans now own their own homes. Owning a home is easier than ever; in 2004 the average down payment was a record low of only three percent.

So if everyone is buying a home, and loans are easier to obtain than ever, what is the problem? The problem is that nearly 55% of the appraisers polled in the survey said that they had been pressured by lenders to deliver appraisals that met a “target” value. The appraisers said that failure to meet the “target” value resulted in either their not being paid, or not being hired again.

Since most appraisers want to keep working, they have had a tendency to meet the target value, even if it means that they have overestimated the value of the property. This drives prices artificially higher and leaves many homeowners with mortgages that may be worth more than the homes they were meant to finance. This problem becomes acute should the owner need to sell the home, only to discover that it isn’t worth as much as he or she owes on it. (more…)

Equity loans were developed to assist homeowners to puff up the equity on their home in order to make profit, or else apply for an additional loan on the house. Home prices grow all the time, making the house increase worth everyday that it exists. A House’s equity then is the whole worth of the property, minus the mortgage the homeowner is paying on the house.

If you set up an equity loan, you must consider that the loan is meant to terminate your first mortgage and then initiate regular payments on the pending loan. Lenders ask borrowers to pay a minimum of five percent upfront deposits, as a guarantee. The greater amount of deposit will shrink your interest rates and mortgage payments under most circumstances. (more…)