Home Equity Loans May Be Your Refinancing Best Option | Ares Nika

Posted on August 25, 2011 by admin

Ready money can be difficult to get your hands on at times, especially if your debts are mounting up, but if you own your own home, home equity loans may be your refinancing best option, making it much easier than you thought to obtain the finance you need. A home equity loan allows you to take out a new loan based on the unencumbered value of your home. Here is how to make sure you get a good deal on a home equity loan. A home equity loan can be worth the amount of money that you now have invested in your house ? the equity ? and if your residence is worth ?275,000 on the market, but you still have ?175,000 to pay on your existing mortgage, then you have an equity value of the difference ? ?100,000, in this case. That means that many lenders would be pleased to give you an advance worth up to ?100,000, as a second mortgage, or home equity loan. As you repay the mortgage sum for your house, your home, as an appreciating asset builds up its value. This is the ?equity? of your home. The equity refers to the differentiation between the current market value of the home and the outstanding finance amount. Even if your home is mortgaged to any financial establishment, you are still eligible to use the equity in your home as security to obtain a large amount of money should you so require, meaning that home equity loans may be your refinancing best option. There are several reasons why you should consider home equity loans may be your refinancing best option for getting additional funds. Firstly, you can get a loan at a reasonable home equity loan rate even though the interest rate may be a couple of points higher than that of your first mortgage. This is because the bank providing the home equity loan would only have second claim on the property in case you defaulted, and this is why the home equity loan providers charge a risk premium. Individuals who are taking into consideration large purchases often find home equity loans to be quite a smart move. Such expensive purchases might include the acquisition of a new motor vehicle, kitchen remodelling expenses, overseas vacation, medical or children?s education costs. In some cases, it can also be advantageous to consolidate debts that carry a higher interest rate and repay them at a lower interest illustrating why home equity loans may be your refinancing best option. If you are seeking a way to improve the value of your home by undertaking some renovations, or additions, or getting deposit money to invest in other assets, an equity loan could also be the ideal solution for your refinancing needs. Maybe you are planning to sell your home, but need to undertake some improvements before putting it on the market; again a home equity loan is also a shrewd choice as it can permit you to do the things in life that you wish to do whilst also funding a much better quality of life. For homeowners, home equity loans may be your refinancing best option and be a great way to secure extra cash when it?s needed. You want to be sure to get the best rate, so check and then work on improving your credit score. When you have determined that the timing is right to apply for an advance, shop around for rates on any price-comparison web site that will let you compare multiple lenders. And of course, always be sure to read the fine print before signing any agreement as home equity loans may be your refinancing best option. Peter Fisher is an expert Author and Publisher of www.themoneyworldonline.com and provides additional resources to help you understand Home Equity Loans

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