The amount of your home equity is dependent on the value of your home and how much money you owe on your home. When it comes to home equity loans, lenders allow borrowers to acquire an amount they need to pay for a single major expense. Here are the things worth knowing when it comes to Home Equity Loans
Uses of Home Equity Loans
Most of the time, homeowners use this for home improvement projects. For example, you want to increase the value of your home by remodeling your kitchen, and you can apply for a HEL to help you finance the renovation. Others use this to pay for a college education while some use it to pay credit card debts. Seniors mostly use this to invest in their retirement.
Home Equity Loan Amount You Can Borrow
If you plan on applying for a HELs, then you must know that lenders won’t bother with loan amounts smaller than $10,000. As for the higher amount they can provide you, it can go as high as 89% of your loan to value ratio. Depending on your home equity, there are a few lenders who will offer up to 100% of your home equity.
What are HELOCs or Home Equity Line of Credits?
You can liken HELOCs with credit cards, and it sometimes comes with a card. When you get approved for HELOC, lenders will give you a spending limit. Whenever you need the money, you can simply withdraw it using special checks or through a credit card. You can then choose when to withdraw your money as needed.
Why Consider Applying for Home Equity Loans?
HELs has a lot of benefits to offer. For one, if you’re looking for types of Mortgage Loans Arlington with a lower (and usually fixed) interest rate, Home Equity Loans is what you need to apply for. It is one easy way to obtain a lump sum of money in a short period. Your home value will secure the loan, and it can also be a tax deductible. Lenders will pay you in cash, and you increase your chances of getting approved since mortgage lenders love tangible assets they can possess in case you fail to pay the loan up.
Another reason to choose Home Equity Loans is that you get to stay in your home and still benefit from its value despite signing it up for the loan. Another reason is that the closing costs of the HELOC tend to be very low – saving you money in the process.
Good Read: How Home Equity Loans Work: Pros and Cons
Disadvantages of Home Equity Loans
HELs and HELOCs also have drawbacks. Like any other form of Mortgage Loans Arlington, their criteria set that one needs to qualify for before deemed eligible for a HEL and HELOC. You, as the borrower needs to make sure you don’t borrow more money than you can actually afford and not more than the actual value of your home. Homeowners will still need to pay for your home’s taxes, mortgage, and insurance, plus you need to make regular payments after tapping the HELs.
Knowing the pros and cons of your loan will give you a better idea of whether or not HEL or HELOC is the right type for you. Consult an experienced and reliable mortgage broker, and he can help find you the best loan type, rates, and deals that will suit your needs, wants and situation.