Ray Heinson asked:
A refinance with cash back from your home’s equity is not a phrase you hear much of nowadays due to not a lot of folks or locations gaining in appreciation. It is vital to understand exactly what the term “home equity” actually means.
As an example, you own a house and it is worth $150,000 from a professional appraiser report or the local realtor ran some comparable property sales for you. The debt owed on the property is just $50,000. As a result, the cash you have available in your home is $100,000; the difference between the principal mortgage balance owed and the current value of the property. So you know you have some value in your property and now want a second loan on your home.
What is better, a Home Equity Line of Credit (LOC) or a Home Equity Loan?
The attractive part about fixed rate equity loans compared to a line of credit is that it can be used for tax write-offs, features below market interest rates and longer loan repayment periods. Therefore, equity loans which have a fixed rate have some benefits right from the get-go.
It is important to understand that it is a second mortgage or lien on your property. Similar to your first mortgage loan, when you accept an equity loan you will normally have terms that give you a fixed interest rate, and a repayment period ranging from 10 to 20 years. An equity line of credit is different in that the interest rate may vary over time and depending when you choose to use the proceeds from the credit line, the terms will begin. The choice is a difficult one when choosing a “Line of Credit” or “Home Equity Loan” due to your individual needs at that time.
In general, people pick a fixed rate home equity loan for costs and fees that are not recurring like a home improvement job on the home and a line of credit is best used for recurring expenses.
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A refinance with cash back from your home’s equity is not a phrase you hear much of nowadays due to not a lot of folks or locations gaining in appreciation. It is vital to understand exactly what the term “home equity” actually means.
As an example, you own a house and it is worth $150,000 from a professional appraiser report or the local realtor ran some comparable property sales for you. The debt owed on the property is just $50,000. As a result, the cash you have available in your home is $100,000; the difference between the principal mortgage balance owed and the current value of the property. So you know you have some value in your property and now want a second loan on your home.
What is better, a Home Equity Line of Credit (LOC) or a Home Equity Loan?
The attractive part about fixed rate equity loans compared to a line of credit is that it can be used for tax write-offs, features below market interest rates and longer loan repayment periods. Therefore, equity loans which have a fixed rate have some benefits right from the get-go.
It is important to understand that it is a second mortgage or lien on your property. Similar to your first mortgage loan, when you accept an equity loan you will normally have terms that give you a fixed interest rate, and a repayment period ranging from 10 to 20 years. An equity line of credit is different in that the interest rate may vary over time and depending when you choose to use the proceeds from the credit line, the terms will begin. The choice is a difficult one when choosing a “Line of Credit” or “Home Equity Loan” due to your individual needs at that time.
In general, people pick a fixed rate home equity loan for costs and fees that are not recurring like a home improvement job on the home and a line of credit is best used for recurring expenses.
Click here for Retail Heaven!
Tags: Comparable Property, Home Equity Line Of Credit, Home Equity Loan
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