Monday, October 02, 2006

Home Equity Lines of Credit

Alright, you’ve been a homeowner for some 10 years now, and you’ve decided it's time for upgrading and expansion. What is the best way to get the funding for home improvement projects? A home equity line of credit is often the most feasible and lucrative way to access extra cash for home improvement. How do you obtain home equity credit? What lenders provide home-equity credit? And who qualifies for home-equity created? All these questions will be answered in the following paragraphs, and hopefully from the information below, you'll be at a more educated shopper.

All the equity lines of credit are obtained based on the sum of equity you have built into your column. If you had your mortgage for over 10 years you have established a substantial amount of equity and should be able to draw on that equity to improve and make repairs on your home. Fixed rate mortgages or adjustable rate mortgages provide a consumer with the greatest opportunity for building equity in their home while paying for their home interest-only loans, 125 loans, and balloon notes do not aid the consumer build equity over a very short period.

Quite often as we shop for mortgage products we don't stop to consider about the "down the road" needs we might experience as a homeowner. That's why today's market of interest-only loans and 125 loans do not seem to work in the consumer's favor. As you make your mortgage payment each month a portion of the payment is diverted to the interest, and the remaining quantity is applied to principal; it is through this process that we build “equity” in our home.

Over the course of the life of the house, say 10 years from now, we manage to outgrow our homes, we manage to overuse our homes and we manage to generate a situation that is in need of repair. If you have a fixed rate mortgage or an adjustable rate mortgage you have managed to build the equity in your home and you high on the opportunity to get a home-equity line of credit, provided you have also taken care to protect your credit rating.

Credit limit of home equity line of credit

The sum of equity of establishing your home and your credit rating will decide the credit limit you receive on a home-equity line of credit. Your lending organization, your local bank, or for whom ever holds your mortgage will be the entity you approach for a home-equity line of credit. So long as your payments are up-to-date, your credit is good, and you have a significant amount of equity in your home you will qualify for a home-equity loan that is comparable to an open line of credit. You withdraw from your line of credit as necessary. If your loan limit is say $10,000, and you need $4000 for plumbing repairs, you basically write a check drawn on your line of credit account to cover the expense and you would begin to pay interest on the loan amount of $4000. Seems to be a very simple way to work wouldn't you say?

Many of the leading organizations think so thus they created a home-equity line of credit; it's a benefit for the consumer and it's a benefit for the lending institution. The buyer has a quick way to draw on the equity in their home, and the late institution has a great way to make a profit. So what would be the disadvantage of a home-equity line of credit? There doesn't seem to be one.

Dangerous mortgage and equity belief

The only disadvantage we've been able to find, with that of the consent of the purchases the interest only loan, the 125 loan, or any of the many variations from these bases that do not permit for the building of equity as the mortgage is paid. Quite often the consumer does not comprehend the potential danger when purchasing interest-only and 125s. But the mortgage lender does, or should. It was for this very reason during the 1920s at the interest only loan was shelved and taken from the market. We seem to have forgotten the lessons learned. For the consumer a home without equity, is a home with no protection. A home without equity is not an advantage for the consumer.

The general information provided by is intended as an educational purpose only, and should not be interpreted as legal advice. The law varies drastically by location and legal specialty, and makes no promises about the accuracy or completeness of the information provided. You should not rely on our information when making legal decisions. We recommend that you consult with a lawyer to get professional legal advice on how best to deal with your situation.
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