Home Equity Investments
Sun, 28 Feb 2010 07:59:16 +0000
When homeowners need a loan but do not want to refinance an existing mortgage, you have the choice of an equity line of credit or a second mortgage. Each option has advantages and disadvantages compared to others. Here are some tips for you to decide what type of home equity loan is right for you.
Home equity loans are of two types: second mortgages and home equity lines of credit. Dependingabout the reasons for borrowing and the amount required for the loan, choosing the right home equity loan for your situation could be thousands of dollars. Here are the pros and cons of both types of loans.
Equity lines of credit
Choosing a Home Equity Line of credit, or HELOC, offers you maximum flexibility. If you use capital for renovations to your home, an equity line of credit provides the flexibilityensure that work is done. Internal improvements and repairs that are rare on the line, if you will only be provided for a fixed amount of your project, then you are a short case of unforeseen circumstances. Equity lines of credit have a debit card that can be used for purchases exactly like a credit card that is tied to the equity in your home.
There are disadvantages for home equity lines of credit. These loans usually come with variable interest ratesare higher than comparable mortgages seconds. Arrive-rate mortgages the lender to adjust the interest and the payment amount at regular intervals. This means that your monthly payment will almost always when the lender is the loan. Another disadvantage of this type of loan is granted, the ease of access to debit cards. The ease of access could groped you spend more than he had expected.
Second Mortgage Loans
Second Mortgage Loanshave many advantages over equity lines of credit. The loans are fixed rate of interest and is possible to a certain amount, without paying the temptation to spend themselves. Second mortgages are for homeowners who want to consolidate their bills into one low payment. If you take a second mortgage for this reason it is important to remember that debt consolidation does not eliminate your debts, moves with ease, so it is easier for you to repay. VictoryTax benefit with home equity loans to pay the interest on these loans will be deducted from your income tax.
There are risks that are associated with both types of home loans. Given that home equity loans guaranteed by you, if you fall behind on your payments, lenders may foreclose and your home. The interest rate you qualify for your home loan will be higher than the rate of primary mortgage because this lendertake more risk for the loan.
You can learn more about your second mortgage and home equity loan options can be found in the register of a free mortgage guidebook.
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valstpatrickFebruary 27th, 2010 on 9:36 pm
What your investment friend is doing is illegal and undisclosed to the lender I assure you. Basically, how a sales transaction works. Lending is based on the contract sales price. Loan to Value calculations are then based on the contract price, buyer brings any down payment and cash to close the deal. If the buyer is getting BACK money at the closing table, it can not exceed what the buyer brought to the transaction. ie Down payment (earnest money) or closing costs, or closing costs concessions.
Closing Cost concessions (what the seller will pay for the buyers closing costs) is capped by the lender usually either 3% – 6% of the contract sales price.
What you are describing is FRAUD. The seller/buyer have agreed on a sales figured LOWER than what the sales contract states. The seller agrees to give the amount OVER stated back to the buyer, this is NOT legal. Real Estate professionals, mortgage brokers and investors are being arrested for this and serving jail time.
If the offer is too good to be true, it usually IS.
Best of luck, be careful
Do the right thing, you will always be on the right side
