Fixed Rate Home Equity Loans

Fixed rate home equity loans, sometimes called 'second mortgages', are borrowings against the equity of your home. Equity means the current market value of your home minus the outstanding liability. Certain percentage of that net worth is advanced as loan. This is known as Loan To Value (LTV) ratio. Disbursement of the amount sanctioned is made in one lump sum. Normally you can choose up to thirty years for amortization. As the name implies with fixed rate home equity loans, the amount of monthly repayment inclusive of interest is fixed. 

Lenders usually stipulate a minimum and maximum for the amount that can be sanctioned. The longer the amortization term, the interest rate will be higher though fixed. You must decide on the period for which the loan is to be taken based on your repayment capacity.  The interest paid qualifies for tax deduction in most cases. The money obtained through the loan can be used for any purpose that you choose. It is prudent to utilize the funds to pay off high interest bearing advances like credit cards. If the money is spent for home improvement, your equity enhances. 

Before applying for a home equity loan, it is wise to analyze the specific purposes for which the funds are required. Obtain a few quotations from different lenders and do a comparative study of the terms and conditions. Be wary of sharks offering fixed rate home equity loans with arrangements containing hidden costs. And remember that the cost of a fixed rate home equity loan is not constituted by interest alone. The chances are that there will be closing charges. Some lenders may stipulate other fees as well. A penal charge being imposed for pre-closing the loan is quite common. Those with poor credit rating may find it easier to obtain home equity loans.

There are risks involved. If repayments are not made on time, you could end up losing your house. If the house is sold before paying off the loan the money you get in hand will be limited.

Get all your doubts clarified before signing on the dotted line. Check with your financial advisor. Or you could get free consultancy from organizations approved by the U.S. Department of Housing & Urban Development (HUD).

Getting Fixed Rate Home Equity Loans After Bankruptcy

After a recent bankruptcy, your loan options are limited. Those needing quick cash for home improvements, wedding expenses, or college tuition may be unable to secure the necessary funds. However, if you own a home, getting approved for a home equity loan following a bankruptcy is a realistic option.

Understandably, banks and credit unions are reluctant to approve an unsecured loan or credit card application. Because home equity loans are secured by your property, lenders are more equipped to take a gamble. However, if the loan cannot be repaid, you will lose your home.

Benefits of a Fixed Rate Home Equity Loan

Homeowners obtain home equity loans for various reasons. In fact, some apply for these loans in an attempt to avoid bankruptcy. Fixed rate home equity loans are perfect for debt consolidation and paying past due utility bills. The interest rates are typically more stable than credit cards and most consumer loans. Thus, homebuyers are able to payoff debts, improve credit, and save money at the same time.

Some prefer fixed rate home equity loans because they do not involve closing costs. Refinancing an existing mortgage is great for obtaining a lower rate and receiving cash. However, because a new mortgage is created, homeowners are required to pay closing fees, which could amount to thousands of dollars.

Fixed Rate Home Equity Loan Lenders

Getting a low rate on a fixed rate home equity loan following a bankruptcy will require work. Homeowners must be prepared to research various lenders and negotiate a good finance package. To begin, submit a loan application through your existing mortgage lender. If your payment history is acceptable, the lender may consider this when approving your application. Thus, you may avoid paying a higher rate.

If your lender offers you a seemingly unbeatable rate, do not stop here. Continue to obtain quotes from other money sources. Shopping around for fixed rate home equity loans online is popular. Mortgage websites make it very convenient to get approved for a loan without leaving your home. Simply submit your loan application and wait for a reply. Within a few hours, lenders will contact your with their best offer.

After obtaining at least four offers from home equity loan lender, compare each offer. What are the terms? Interest rate? Monthly payments? Subsequently, pick the lender that offers the most desirable mortgage package.