Is It Time To Grab Your Home Equity?

If you bought a home in the past few years the odds are overwhelming that your equity increased. According to the National Association of Realtors, the value of a typical home grew by 12.6 percent last year. That means a house worth $184,100 at the end of 2004 was likely to be valued at $207,300 … Continue reading Is It Time To Grab Your Home Equity?

If you bought a home in the past few years the odds are overwhelming that your equity increased. According to the National Association of Realtors, the value of a typical home grew by 12.6 percent last year. That means a house worth $184,100 at the end of 2004 was likely to be valued at $207,300 at the start of this year — an increase of $23,200.

No doubt a lot of owners are looking at higher home values and wondering if now is the time to get a home equity loan. For three reasons, at least, it’s a question that should be asked.

First, home equity financing is typically available at rates far below the cost of credit card financing and most other forms of consumer borrowing. By getting a home equity loan and paying off old consumer debts it’s likely that you can substantially reduce monthly costs.

Second, unlike consumer loans, the interest paid for up to $100,000 in home equity financing is generally tax deductible. However, the rules regarding interest write-offs are not straight-forward, there are circumstances where some or all home equity interest may not be deductible. For details, speak with a tax professional.

Third, you can often get a home equity loan without paying any fees or charges. This does not mean there are no costs, rather the lender will pay such expenses under certain conditions.

So there you have it: Home equity financing is cheap, the interest is likely to be deductible and you don’t need a lot of cash — or maybe any cash — to sign up.

But despite all the good news regarding home equity loans, such financing is a form of debt. Just like a regular mortgage, if you don’t pay you can lose your home and that’s a very good reason to be careful.

What do you need to know about home equity loans? Here are the basic questions to ask:

How much can I borrow? Loan programs differ, but many mortgage lenders will provide enough home equity financing so that total mortgage debt equals 80 to 100 percent of the property’s value.

If you have a home worth $550,000 and a current loan balance of $300,000, you might be able to get a home equity financing ranging from $140,000 to $250,000. In this example, 80 percent of the home’s equity would be $440,000. This amount, less current debt ($300,000), means that $140,000 would be available to you with a home equity loan. At the 100 percent loan-to-value level, $250,000 would be available — $550,000 in equity less $300,000 in existing debt.

How much should I borrow? The fact that you can borrow big sums does not mean it always makes sense to obtain the largest possible loan. When looking at potential home equity loans be certain that the payments will be comfortable, both now and in the future. Since most home equity loans are adjustable-rate products, you need to consider that rates and monthly costs can go up.

What type of home equity loan is best? There are two basic forms of home equity loan, the cash-out refinance where you receive a lump sum at closing and the home equity line of credit (HELOC). The cash-out refinance is simply a fixed- or adjustable-rate second loan on the property, while a HELOC is much like a credit card — you draw money as needed and interest is charged on the balance. As you pay down HELOC debt, more money is available to borrow up to the original credit limit.

There is no “best” choice between a simple second loan and a HELOC. Instead, go with the option that makes the most sense given your finances and preferences.

How can I avoid the debt monster? If your reason to get a home equity loan is to pay down consumer credit, that’s fine — as long as you do not go out again and rack-up more consumer debt for credit cards, car loans and other expenses.

Combine home equity payments with a new set of hefty consumer bills and your financial position can get worse so plan ahead: Part of every home equity loan should be a plain commitment to establish a budget and avoid additional consumer debt.

Is there a catch to those home equity loans that require no cash to close? Such financing often comes with a pre-payment penalty if the loan is terminated within a given period, say two or three years. The logic here is fairly sensible: The lender had cash costs up front to close the loan and wants a reasonable period of time to recover such expenses. As a borrower you want to make sure the prepayment period is limited to just a few years, the shortest period possible.

You also want the best rates and terms, but beware of loans with low rates up front for a few months — and then far higher rates and payments in the future. As always, shop before you settle.

Fast Cash Personal Loans – How To Get The Loan

Fast Cash Personal Loans – How To Get The Loan Fast

The quickest way to get cash is to apply for a cash personal loan, also called a payday loan. In a matter of minutes your application can be approved and you can find your money in your checking account the next morning. While you are online, you can also check rates to be sure you are paying the lowest fees.

Quick And Easy Application

Online applications are quick and easy. You simply type in your contact information, along with income source and checking account information. With most lenders, you dont even need to fax in copies of past pay stubs or photo id. With their databases, payday companies can check your information online, providing you with a near instant response. And there are no credit checks.

While you can apply at a traditional store, it will take longer. Not only will you need to take in necessary paperwork, but you will need to wait as the information is copied and verified. You also have to plan your schedule around business hours, never a problem with online personal loans.

Speedy Cash

Speedy cash is available from online payday loan companies. Once your application has been approved, the money is directly deposited into your checking account. This takes a few hours for banks to process, but usually funds are available by the next day.

Unlike a store lender, you dont have to deal with paper checks. Nor do you have to go to the bank, deposit the check, and then wait for it to clear. With online lenders, your cash advance is available as soon as the money is deposited into your account.

Fast Rate Comparison

Not only are the application and cash advance processes fast, shopping is quick too. Most payday lenders list their fees and APR on their websites. You can research a dozen offers within minutes. If you cant find information on fees, feel free to contact the lender through email or over the phone. Most will get back to you immediately.

You just cant find such quick service at a storefront cash advance company. Technology speeds the process, enabling you to take care of your financial emergencies quicker.

Raise Value Of Your Property By Unsecured Home Improvement Loan

Raise Value Of Your Property By Unsecured Home Improvement Loan

You are a proud owner of a home and now want to do some renovation works on it which demands lot of funds. But due to the fear of repossession or for any other reason you do not want to take a loan against the home. In cases like this unsecured home improvement loan gives easy access to the finance. These borrowers can utilize unsecured home improvement loan for variety home improvement works. After the much required renovation done on your home, its market value escalates and you can take advantage of it in many ways.

Borrowers are not required to offer any collateral to the lender in the option of unsecured home improvement loan. However some kind of security is always essential in any type of loan. In the absence of the collateral, lenders want to secure the loan on the grounds of borrowers credentials. Unsecured home loan seekers should ensure the security of the loan. To do this, borrowers should produce proof of their regular income and financial standing if any. Secondly credit score of these borrowers matters a lot in finalizing the loan deal.

Unsecured home improvement loan seekers are advised to pay special attention to their credit report on which the loan offer depends a lot. Due to lack of collateral, lenders like to see if the borrowers have good credentials to return back the loan. Lenders judge the credentials through looking at credit score of the borrower. Credit score, on FICCO scale ranges from 380 to 850 and score of 750 and above is considered safe for the loan offer. If borrowers do not possess a sound credit score then, to show improvements in credit score they should first make sure that there are no errors in their credit report. Secondly they should try to pay off easy debts in order to improve credentials in the eyes of lenders.

Generally unsecured home improvement loan is provided for a shorter duration and the loan amount also remains lesser. Not only that, the loan comes with higher interest rate as the lender has to spend on insurance of the loan. Borrowers however are able to get the loan on better interest rate and terms once they convince the lender of their credentials. To take unsecured home improvement loan beneficially, borrowers should prefer applying for the loan online. They receive numerous loan offers from different lenders. They can compare the loan packages and can choose the one having lower interest rate.

If taken carefully unsecured home improvement loan can make life easier in terms of your financial position. Make sure that you pay loan installments in time to avoid falling in bad debt.

Bad Credit Second Mortgage by the Numbers

Bad credit second mortgages make up a sizable part of the mortgage market. According to a recent survey by the Mortgage Bankers Association, the number of second mortgage originations increased by 13 percent in the second half of 2005 and closed-end second mortgages increased by 33 percent. The survey included 114 lenders that originated $189 billion in second mortgages, many of them to people with bad credit.

There are at least five numbers that determine the ultimate cost of a bad credit second mortgage: interest rate, years on the job, credit score, closing costs and term length.

Interest rate
The interest rate on a second mortgage is slightly higher than on a first mortgage because it is in a subordinate position. If the borrower defaults and the home goes into foreclosure, the second mortgage is settled after the first, so the lender is taking a greater risk.

The interest rate on a bad credit second mortgage will be higher still, so says Steven Frank, Senior VP at FlexPoint Funding, one of the nations largest subprime mortgage bankers. A bad credit borrower is someone with a FICO score below 62. He or she will pay between 1.5% and 2% higher interest for a second mortgage, but there is no shortage of money or willing lenders in the bad credit mortgage market.

Work history
When considering a bad credit second mortgage, lenders look at the borrowers ability to repay the mortgage. This is verified by checking his or her current employment and total income. Mortgage lenders prefer that the borrower has been employed at the same place for at least two years, or has been in the same line of work for several years.

Credit score
The lender will also look into how the borrower has met previous financial obligations. This is where a credit report and credit score come into play. A credit report lists a persons credit activity for the last several years. It shows the highest balance, current balance and payment history on every account. Negative data such as late or missed payments gets erased after a few years but a bankruptcy can stay in the report for up to ten years.

Credit scores (also known as FICO scores) range from 900 down to 300. A score of 680 or higher signifies good credit. A score between 620 and 680 will cause most mortgage lenders to take a harder look at a borrower. If the number is below 620, as Mr. Franks points out, the person falls in the bad credit range and is charged more for a bad credit second mortgage.

Closing costs
The closing costs associated with a bad credit second mortgage will be cheaper than refinancing a first mortgage. In addition to minor processing fees, some lenders may charge an up-front fee in the form of a percentage of the total loan amount (known as “points). A borrower may also be able to pay points to lower the interest rate on the loan.

Term length
The longer the bad credit second mortgage, the lower the monthly payments but the more interest paid overall. The shorter the second mortgage, the higher the monthly payments but the total costs will be lower. It is in the borrowers best interest to choose the shortest possible term he or she can reasonably afford.