Home equity lines are ideal for many people with unique and different financial situations. Some of the most common circumstances to request a home equity line of credit are: unexpected expenses (medical expenses, college tuitions), home improvement projects (bathroom or kitchen remodeling, installing a new roof, new home addition, etc...) or debt consolidation. Or take out a low interest home equity loan to facilitate a tight financial situation.
What is a Home Equity Line of Credit?
The hottest part of the lending industry currently is a Home Equity Line of Credit or HELOC for short. If you are watching TV, surfing the web or even reading a newspaper you are bombarded with advertising of HELOCs. However within that 30 second commercial or pop-up there isn't enough information for you to make a decision.
A home equity line is essentially a 2nd lien on your property. You go through the same application process as you did for your first loan. However this process can be a lot quicker and with less paperwork.
Once you close on your HELOC is works as a cross of a checking account and credit card. You are given a checkbook with drafts that can be written out of the funds in the HELOC. Then you are obligated to pay back only the funds that you used plus the interest that accrued during that time period (i.e. credit card).
Is a Home Equity Line of Credit Right for you?
So is now the right time for a HELOC and is it the right product for you? Only you can answer that question, but here are some ideas to think about during your search for the right one.
What is the reason for the HELOC?
Are you looking for cash to start or finish those home improvement projects?
Do you have unexpected expenses and need cash quickly?
Are you looking to consolidate debt?
How big of a line of credit do you require?
You should have an idea of how much you need and how much is available. A simple way to find out how much is available; take the value of your home and subtract the balance of your current mortgage. For instance if your house is worth $200,000 and you owe $100,000 on your first mortgage, you could potentially get a line for $100,000.
Can you qualify for a HELOC?
Aside from the value of your home your Credit worthiness is the biggest factor in obtaining a line of credit. Make sure you have a good idea of your credit rating when searching. This is where you can benefit from dealing with one of our recommended online lenders.
What will it cost you?
Find out the costs, hidden or not. Many lenders will give you a line with no up front closing costs. However if you decide to close that line within a specified time they will charge you a prepayment penalty or 'early closure' fee. So be sure to ask this question up front.
What rate is being offered?
By now you understand that the rate flashing on TV or online isn't the rate everybody gets. So be sure to find out what the rate is for your situation. Again this is where enlisting the help of our brokers will help immensely.
Finally, selecting the right lender.
There are countless lenders only a phone call or mouse click anyway. Make sure you do the research and find the right lender for your situation.
Home Equity Line Lenders
Now that you have armed yourself with some basic knowledge of home equity lines you can begin to research lenders. The best piece of advice that can be given, don't over do it with the number of lenders. The more you speak to and request quotes from the harder it will get for you. We suggest looking at 2 to 3 HELOC lenders. This way you can give yourself enough options but not be bogged down with too much information. Look at one of our trusted lenders to see if they fill your need.
RSS
Home equity lines are ideal for many people with unique and different financial situations. Some of the most common circumstances to request a home equity line of credit are: unexpected expenses (medical expenses, college tuitions), home improvement projects (bathroom or kitchen remodeling, installing a new roof, new home addition, etc...) or debt consolidation. Or take out a low interest home equity loan to facilitate a tight financial situation.
What is a Home Equity Line of Credit?
The hottest part of the lending industry currently is a Home Equity Line of Credit or HELOC for short. If you are watching TV, surfing the web or even reading a newspaper you are bombarded with advertising of HELOCs. However within that 30 second commercial or pop-up there isn't enough information for you to make a decision.
A home equity line is essentially a 2nd lien on your property. You go through the same application process as you did for your first loan. However this process can be a lot quicker and with less paperwork.
Once you close on your HELOC is works as a cross of a checking account and credit card. You are given a checkbook with drafts that can be written out of the funds in the HELOC. Then you are obligated to pay back only the funds that you used plus the interest that accrued during that time period (i.e. credit card).
Is a Home Equity Line of Credit Right for you?
So is now the right time for a HELOC and is it the right product for you? Only you can answer that question, but here are some ideas to think about during your search for the right one.
You should have an idea of how much you need and how much is available. A simple way to find out how much is available; take the value of your home and subtract the balance of your current mortgage. For instance if your house is worth $200,000 and you owe $100,000 on your first mortgage, you could potentially get a line for $100,000.
Aside from the value of your home your Credit worthiness is the biggest factor in obtaining a line of credit. Make sure you have a good idea of your credit rating when searching. This is where you can benefit from dealing with one of our recommended online lenders.
Find out the costs, hidden or not. Many lenders will give you a line with no up front closing costs. However if you decide to close that line within a specified time they will charge you a prepayment penalty or 'early closure' fee. So be sure to ask this question up front.
By now you understand that the rate flashing on TV or online isn't the rate everybody gets. So be sure to find out what the rate is for your situation. Again this is where enlisting the help of our brokers will help immensely.
There are countless lenders only a phone call or mouse click anyway. Make sure you do the research and find the right lender for your situation.
Home Equity Line Lenders
Now that you have armed yourself with some basic knowledge of home equity lines you can begin to research lenders. The best piece of advice that can be given, don't over do it with the number of lenders. The more you speak to and request quotes from the harder it will get for you. We suggest looking at 2 to 3 HELOC lenders. This way you can give yourself enough options but not be bogged down with too much information. Look at one of our trusted lenders to see if they fill your need.
Leave a comment