Home Equity Loans
Equity Loan Info:
Loan or Line?
-HELOCs for Emergencies
-Home Improvement Loans
-Loans vs. Line of Credit
-Downside of Equity Loans
HOME EQUITY LOANS VS. EQUITY LINES OF CREDIT
When deciding if an equity line of credit or loan is better for
you, you must decide if you would prefer a lump sum with a fixed
interest rate, or a line of credit with that you can utilize
whenever you want.
Get more information that will help you determine if an
equity loan or line of credit is right for you.
Home Equity Loans
A home equity loan is a
fixed rate loan, making it a second
mortgage. Meaning, you are agreeing to pay back the amount you
borrow with monthly payments for a term of 10 to 30 years. These
types of loans are usually the best option if
you need a certain amount all at once -- for
home improvements, or
perhaps to start a new business venture.
There are great
tax breaks for home equity loan interest rates.
Payback terms of home equity loans:
If your equity loan is for 30 years, then you will have to settle
your loan after said time. However, if you are selling your home you
will be obligated to repay your equity loan at the same time as when
you settle your first mortgage, at closing.
Since you have two mortgages, there is a minor additional fee that
you will have to pay when clearing your title. The lawyer handling
your closing will prepare the additional release which will cost
anywhere from $10-50. Learn more about
the cost of equity loans.
Home Equity Lines of Credit
These types of loans eliminate the sureness of an equity loan,
but offer more flexibility. You can borrow when you want, as
much as you want. You can write a check, and the money is yours.
Payments are also more open. Interest only loans are available for
say, five years or more, or less. With an equity line of credit you
only pay interest on the amount of money that you are borrowing. So,
if you do not borrow any money, you will not owe any money.
Payback terms of home equity lines of credit:
Typical home equity lines are shorter than 30 year
mortgages. Equity lines of credit are divided into two period, a
'draw' period and a 'payback' period. During the the 'draw'
period, you can borrow as much as you want. When you payback the
amount you borrow, your credit limit is replenished. The draw period
is established in the terms of the loan and can be extended when it
expires. However if you can not or do not renew your draw period,
you can not borrow anymore and will have to payback your loan. This
period is called the 'payback' period. The 'payback' period is
usually 5-10 years.
How much cash can I get from the equity of my
The equity of your home is the difference of what your house is
worth, and how much you owe on it. For example, if your house is
worth $300,000, and you owe $150,000, you have $150,000 worth of
equity available for a loan or line of credit. There are some simple
practices you can follow to
build the equity of your home.
However, Star Loan Services is able to offer
equity loans and lines of credit more than 100% of your home's
equity. Our LTV, loan-to-value is typically 125%. So, using the same
numbers above, with a 125% LTV, you would have $225,000 worth of
available equity. Learn more about
125% equity financing.