After hearing all of the hype about a home equity loan you may be wondering if this miracle loan can help you out of a financial problem, or if it will only push you in deeper. To help you make this decision you will need to learn about home equity loans.
After learning about the basics of these loans you should be able to answer the question “home equity loan – is it for you?”
For some people a home equity loan is a great financial product that can help them to consolidate their debt, pay for their child’s college tuition, or to help them take a family vacation, while others use it as a home improvement loan. However, there are people that should not use home equity loans. People who are having troubles paying their current bills may think that by taking out a home equity loan to pay off their credit cards and other bills that they will be improving their financial position.
However, after a few months many people in this situation revert to their old spending habits and rack up their credit card debt once again. At this point they not only have a higher debt balance, but now if they can’t pay their bills they can lose their home.
If you feel a home equity loan is for you then you have several options to consider.
First you can select mortgage refinancing as your way of cashing out the equity in your home. The advantages of this home finance method are that it offers lower loan rates and longer terms. Your other option to get a second mortgage that is set up as either a revolving line of credit or as a lump sum payment. The advantages of this type of mortgage are that they are easier to qualify for, there are several equity lenders available, and they typically have lower closing costs. However, they tend to change higher interest rates and require shorter terms.
Author: Sarah Freeland
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