Mortgage and Mortgage Refinance

If you have been in your home for a number of years and you have established some equity, you may be considering liquidating some of that equity. To go with a Home Equity Loan will be a great way to do this.

A home equity loan allows for you to borrow off of the equity you have established in your home through appreciation and monthly mortgage payments without having to touch your first mortgage.

This explains why a home equity loan can be referred to as a second mortgage as well. But before you go and start signing applications, shop around so you can find the best home equity loan rate out there.

One can choose from the two types of home equity loans that is available in the market. The standard home equity loan that has a fixed rate, which of course, is based on prime, happens to be the first type. You start making monthly payments immediately upon this loan that you receive in a lump sum.

The other type of loan available is the home equity credit line. This one comes in the form of a line of credit, as is implied by its name. The variable nature of the rate for home equity line of credit makes it to fluctuate with the prime rate. Many of them offer special introductory rates for the initial five or six months.

Once approved for a home equity line of credit, you will not receive it in the form of a lump sum. Instead you will receive it in the form of a check book giving you easy access to draw upon it in the amount you would like at your convenience. Once you do draw upon it, you will have to begin paying it back on a monthly basis. Normally in the form of interest only for the first ten years.

Suppose you were to receive a home equity line of credit in the amount of $25,000.00. If you only wanted to borrow $6000.00, than all you would have to do is write out one of the check’s the lender sent you and deposit it into your checking account. Your payment would than be based on the $6000.00 you borrowed from your line.

Take into account that home equity credit lines do come with a rate that keeps fluctuating, and that rate is based on prime. So, the rate on your home equity credit line will also go up if the prime rate goes up.

On the other hand, if the prime rate goes down, than the rate on your home equity credit line will go down.

Mortgage companies are very competitive, so whichever home equity loan you decide to go with, it would be in your best interest to shop around so that you may compare rates.

After allowing for a few loan officers to assess your situation and offer you a rate and product, base your decision on the rate and product that best fits your needs and budget.

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