So, you own a home and want to tap into some of the equity you have in your home to take care of some projects. You start calling mortgage companies daily to find out who will give you the best deal. They put you through their questioning and you play smart thinking that you are in charge and that you will outsmart them to get the best deal you can. If this is what you think, you better think again. Shopping for a home equity loan can put holes in your bank account unless you know how to go about getting the best deal.
First of all, what is equity? Equity is defined as the residual market value of your home, or the value that your home has accrued since you purchased it. For the first few years of paying for your home, you are not considered an owner, but a partial owner. Once you have paid back your entire loan, you are considered to own the house. However, your home will generally increase in value during the period of your repayment, and you can, in many instances, borrow against that value.
The amount of money you can borrow depends on the equity you have in your home. And the interest rate you will pay is dependent upon your credit score, your debt to equity ratio, as well as your income.
Home equity loans can get you into trouble if you do not properly prepare yourself for it. You need to keep in mind that there are serious consequences if you for some reason fall out on your loan repayment responsibilities. If you don’t make your loan payments for whatever reason, your lender has the right to foreclose on your home.
Equity loans are a great resource for those people who need access to funds but do not want to touch what they have in their 401k or their savings or investment accounts. It is also a quick and relatively easy way to get a significant sum of money without needing to have spotless credit.
If you do not want to get ripped off by a mortgage broker, loan officer or a lender, it will probably be a good idea to visit savebigonhomeloans.com to get more information on the smart way to shop for a home loan.
By: Chris Simons
Posts Tagged 401k
The fact that the US has 3.9 million homes for sale and most of them coming from foreclosures means that newer, more efficient Home Loans must be offered. The truth is, getting a home loan is easier now than before the Real Estate boom, you just need to look in the right place. In the following article I will tell you where to look for the lowest interest rates, and well as what the banks will be looking for when qualifying you.
In order to resolve some mysticism, and shed light on this shady subject I inform my clients that they should specifically ask for Government Loans such as FHA or VA (Federal Housing Administration, Veterans Administration.) I say this because the government has poured money into these departments and are eager to create revenue by lending it out in Home Loans. For instance, FHA offers First Time Home Buyer Programs, Loans that allow 3 or more borrowers, Little or No Money Down Programs, and offer the lowest Interest Rates in the country backed by the Federal Government. FHA is a great place to look for Financing as they are rewriting the book on Stable and Sustainable financing of Homes now and for the future. You will stay ahead of the curve by empowering yourself with knowledge of specific programs, and the constant changes that are made on Government Loans. So now that you know where to look, what will determine whether you qualify or not?
The first place to start is getting with a quality professional Loan Officer, and or Realtor that specializes in Government Loans. What they will tell you is that the banks are looking for Credit, Capacity to pay back, and Collateral such 401k, or cash on hand. I suggest using a local Loan Officer to help you establish your credit scores, procure paperwork, and calculate payments. Since most Loan officers work on commission only, they are free of charge to start, and are usually very savvy and eager professionals. (For a list of Loan Officers I work with and recommend, please contact me) These 3 C’s of Financing are the most widely and acceptable terms to Finance Professionals and speaking the same language of professionals is the best way to make sure you gather all the proper facts.
So now that you know where, and what to look for, get out there and see what is for sale. I bet you will be amazed by the price, and it may even be cheaper than the rent you currently paying. Make sure you consult a professional, speak the same language, and ask for Government backed Loans.
By: Jesse Saenz