Tag Archives: home
Top 5 mistakes when getting home equity
Rates have historically never been better, so nowadays the temptation to borrow against your home equity is very strong. However, many homeowners unknowingly make costly mistakes.
Here are the top 5 mistakes people make when applying for a home equity loan.
Mistake 1 – Not Knowing The Difference between a Home Equity Loan and a Home Equity Line of Credit
A home equity loan is a one-time transaction that allows you to draw out all the funds available.
A home equity line of credit (HELOC) is open; you can choose a small initial advance against the full amount of the line; then reuse the line of credit as often as you want during the period that the line is open. Your monthly payment is based on the outstanding balance.
A general rule of thumb is: use a home equity loan when you need all the money up front; such as cash for home improvements, debt consolidation, or a large one-time purchase.
If you need ongoing access to cash and revolving credit a HELOC may be your best choice.
Mistake 2 – Taking a Home Equity Loan When You Plan on Refinancing Your First Mortgage
Many mortgage companies look at the combined loan amounts (i.e., the sum of the first and second loans) even when you are refinancing only your first loan. If you plan on refinancing your first loan the lender may require you to pay off both your first and second mortgages; or close your home equity line completely.
Check with your mortgage company to see if having a second loan will cause your refinance to be turned down.
Mistake 3 – Not Knowing The Hidden Costs
If you feel you must take out a home equity loan or open a line of credit it is important to know ALL the costs. With any loan secured against your property there can be hefty insurance costs, appraisals and other fees that can cut into your loan amount.
Mistake 4 – Only Applying at Your Current Bank
Many consumers apply for their home equity loan from their home bank. This can be a costly mistake.
As in any other type of loan, be sure to shop around for the best deal. Your current bank may not be able to give you the best interest rate or the best terms.
Think twice before deciding to use your local bank; you may find that there is another lender out there that can offer you a substantially more attractive loan program.
Mistake 5 – Not Checking Your Credit First
As in any type of loan, it is imperative that you get the best rates and terms. However, if you have credit problems it will seriously affect your ability to qualify.
In fact, if your credit is not the greatest you may have no choice but to use alternative lenders specializing in hard to place loans. The solution: Make sure you go with the bank or lender that provides the best rates for your type of credit whether good or bad.
There you have it. Avoid these 5 mistakes and you could save yourself hundreds, if not thousands of dollars when you get a home equity loan.
Strategic Capital Network is a licensed mortgage brokerage specializing in helping credit challenged homeowners qualify for home equity loans.
Thinking of home loans
For those that are planning to get married soon, they will not only have to think about the wedding, but they will also need to make sure that they will get to consider buying a new home. You will certainly not want to live into the same home as your mother and father are living in, as that will be a totally failure. As such, the first thing you will need to do is delve into a website that will let you in on many types of home loans.
When it comes to making a loan, this is a very important step, as you will both need to make sure that you have a stable job in order to pay it back. And that is why before you will sign anything, you will have to ensure that you will get to delve into a lot of research and make only the wisest and the best decision of them all.
As such, the majority of people when they will want to delve into getting a home loan will acquire it through mortgage. As such, this means that if there will be anything to go wrong with your mortgage, your house will be the one that will face the consequences, as it acts as a guarantee. There are some cases though in which you will not only be able to mortgage but land.
Paying mortgage is something that millions of people are accustomed to and millions of people around the world are using it. With so many banks out there though, you will have to ensure that online research will be done at 100 percent of your potential and that no good offers will be overlooked.
But you should know that it is not that easy to be let in on a loan and that you will have to supply the lender with each piece of info that you will be requested to provide. For some people though, calculating everything that is needed for this process will be a hurdle, so that is why if you want to make sure you don’t miss out on anything, you will need to use a home loans calculator.
It is thus recommended to make sure that you will delve into contacting as many lenders as you can. They each have different interest rates and you will certainly scratch your eye balls out if you will find out that you just missed out on a very good deal.