Home equity is the difference between the market value of your home and what you owe on it. A second mortgage home equity loan enables you to convert this equity to cash.
It could be well worth your time to check into a second mortgage home equity loan as it might save you thousands of dollars in interest because of low rates. However, statistics show that many U.S. homeowners have not yet refinanced. Either they have a good rate already on their first mortgage or else they don’t want the hassle of mortgage shopping.
But online loan applications have made the process of getting a second mortgage home equity loan easier and simpler than ever.
Benefits of a Home Equity Loan
A second mortgage home equity loan can be used to pay off outstanding debts like high interest credit cards, unsecured loans, unexpected medical bills or expensive car payments. An added benefit is that because it’s a mortgage secured by real property, it is tax deductible, up to $100,000 (for couples filing jointly). Check with your tax professional to see about your own specific situation.
If you have bad credit, a home equity loan can help you:
Cautions for a Home Equity Loan
A second mortgage home equity loan can improve your financial situation, but not automatically. If unchecked spending has put you behind the eight ball, you will have to change your spending habits and learn to live within your budget.
The shorter the term of your loan, the less interest you will pay in the long run. If you can handle the payments, select a term of three-to-seven years instead of the more typical ten-to-15year loan.
Avoid loans for more than the value of your home, like the popular 125 loans that allow you to borrow 125% of the appraised value of your home. You won’t be allowed to deduct all the interest, plus, you'll be putting your house at unnecessary risk if property values go down.
Don’t get tricked into paying high closing costs. Don’t fall for low introductory rates that are tied to an adjustable-rate loan or a line of credit.
When you get a loan using your home to guarantee repayment, federal law gives you three days to reconsider a signed agreement and cancel the deal without a penalty. This “right to rescind” is guaranteed by the Truth In Lending Act. You have until midnight of the third business day to cancel the transaction.
Home Equity Loans Online
Here are a few things to keep in mind when looking for home financing online:
Related Information On: