Home Equity Loan Tips – All You Need To Know About Home Equity Loan Before Signing Up

Home equity loans are commonly used for debt consolidation, home improvements, educational expenses, unplanned emergencies, vehicle purchases, and other gifts and purchases. Home equity loans are a popular financing option for homeowners who need additional cash. Affordable Home Equity Loans

These loans usually offer a lower interest rate than credit cards. In addition, the interest you pay may be tax deductible. The two most popular types of home equity loans are home equity line of credit and home equity fixed loan. A home equity line of credit offers you a revolving credit line with a variable rate, much like a credit card.

Home equity loans are typically junior loans and should not be confused with a basic refinance, which means paying off an existing mortgage and replacing it with another loan. Home equity loans fund fairly quickly and are subordinate to an existing first mortgage. In other words, an equity loan falls into second position.
The lender's security for the loan is your home, meaning if you go into default and do not make your mortgage payments or otherwise abide by the terms of the loan, the lender has the right to foreclose. In many states, like California, if a homeowner stops paying the first lender, to protect its security, the second-position lender can step in, make up the payments to the first lender and begin its own foreclosure proceedings. All of which means your home is at risk when you take out a home equity loan. Mortgage Loans

Home equity loans are more popular than ever, particularly as a way to consolidate debt. In fact, debt consolidation is the biggest single reason people give for why they are taking out a home equity loan. The problem is that after they have put their homes on the line, many folks continue overspending. Before long, they are in deeper credit trouble than before. Affordable Home Loans

Making matters worse, more and more mortgage companies are using “predatory lending” practices to get people to sign on for high-rate loans, which come with excessively high fees, that often push homeowners toward foreclosure. Fortunately, the powers-that-be in and around the beltway are waking up. While there are currently laws on the books that protect home equity borrowers to some degree, there has been an outcry lately for more legislation and regulations to protect consumers who apply for home loans.

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