Bay Equity Home Loans
Therefore some people find themselves asking a very important question "Do I Need a Home Equity Loan?" You might but that will depend on your financial situation and what you actually need the money for. But either way home equity loans are a reliable option that may people simply overlook. A home equity loan is where a borrower uses the equity in his home as collateral against the loan he has been given. If you take the value of your home in todays market and then subtract what you owe on your home (if anything) you will then get your homes equity. As for the interest rates on a home equity loan they are usually quite low and are at a fixed rate; which in turn puts less pressure on the borrower because one of the top concerns with any loan is that of the interest rate. There are two types of home equity loans that a home owner can choose from.
At the end of the "draw period" you might be able to renew the credit line however it is just as possible that you wont be able to borrow any additional money. This is usually spelled outlined in the lending agreement therefore before any paperwork is signed read the fine print and ask questions. Also be aware that you might just have to pay the money you borrowed from the home equity loan back in full at the end of the designated period. Some lenders will offer a discounted interest rate on home equity loans but chances are good that the lower interest rate will only apply for the first three to six months of the loan. If you opt for what is called a variable interest rate you will find that your monthly payments will change as interest rates change. If you decide to sell your house you will also be expected to pay off the home equity line you have borrowed. Along the same lines of a home equity loan comes the fixed rate home equity loan meaning the borrower knows what the monthly payments will be and the time period of repayment.
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Theres the standard home equity loan which is called a "closed end" loan or better yet a "second mortgage". Then theres the home equity line of credit or "open end" home equity loan. The closed end home equity loan is an ordinary loan in which you receive the full loan upfront and must pay it off in installment over time. The open end home equity loan is a line of credit that you may use when you need it; but you will still have to pay it off over time just like a closed end loan. In order to determine which type of loan you need you may have to really think about what you need the money for. Do you need a large amount of money at all once or do you just need a line of credit for a short while (which may be increased or decreased at your discretion). A financial advisor will always help you come to a decision.
Having an equity line of credit secured to your property can provide a safety net of cash reserves for family emergencies or sudden investment opportunities. We suggest getting approved for a home equity loan when you need it least. What we mean by that is "Dont wait until you are late on your bills or when a close family member needs your help." Rarely in life can you plan for investment opportunities financial obstacles. Remember that mortgage lenders and banks can always get you a loan when you need it. For example If you are late on your credit card bills and the banks report you late to the credit bureaus there is a good chance that your credit scores have dropped and you might not qualify for the home equity loan you need. The same is true for if you stumble across a worthy investment. Typically investments have a small window of opportunity and by the time you get approved for a second mortgage and actually close escrow the opportunity may be gone.