Obtaining an Equity Loan
Although most people think of a home when the word equity loan is mentioned, this can really apply to anything that is of value.
It can be a boat, a car, a home, a motor home, or any other high-ticket item.
The term equity means that the value of the item in question is more than the amount that is owed on it.
Purpose of an equity loan Many circumstances arise that may warrant the use of an equity loan.
Some of the more common ones include the following: College tuition Medical bills Home repairs and/or remodeling Debt consolidation Wedding Retirement Vacation home Other smaller amounts may be borrowed against equity in items such as cars, boats, and motor homes, but the primary residence is the most common use for equity.
Sources of funding Plenty of sources are available for financing an equity loan, but it's pertinent for you to find the one that is right for your circumstances.
The cheapest interest rate is going to be derived from an equity loan on your home, but if you only few a small amount of cash, you may want to consider a boat or motor home in which you have equity.
Not only are those sources quicker for smaller loans, they are easier to obtain.
However, if the amount of funding needed is substantial, an equity loan on your home will offer the cheapest rate with the best repayment term.
Remember, though, that different lenders offer different interest rates and payment plans, so it's important to make certain you make some inquiries before you commit to a loan.
Type of loan Another consideration is whether you want an equity loan or an equity line of credit.
If the purpose of the loan is a small amount, and you don't have equity anywhere but in your home, you might consider a line of credit instead of a loan.
With a line of credit, you are approved for a maximum amount and can draw against that amount for a specified number of years without renewing it.
Unlike a loan, the payments on a line of credit are a percentage of the outstanding balance just like a credit card payment.
A line of credit also allows you to draw on more funds later if needed without having to return to the lender for more funding.
If a substantial amount of funding is needed for one purpose, a cash-out refinance may be the best option if the interest rate on equity loans is higher than that on a mortgage.
Since interest rates tend to fluctuate based on the state of the economy, it's wise to obtain current rates as close to the time you need the funds as is reasonably possible.
If you obtained a rate quote even thirty days ago, it's more than likely that the quote is no longer current.
You can also follow the business section of the local newspaper for current trends regarding interest rates for various types of loans.
It can be a boat, a car, a home, a motor home, or any other high-ticket item.
The term equity means that the value of the item in question is more than the amount that is owed on it.
Purpose of an equity loan Many circumstances arise that may warrant the use of an equity loan.
Some of the more common ones include the following: College tuition Medical bills Home repairs and/or remodeling Debt consolidation Wedding Retirement Vacation home Other smaller amounts may be borrowed against equity in items such as cars, boats, and motor homes, but the primary residence is the most common use for equity.
Sources of funding Plenty of sources are available for financing an equity loan, but it's pertinent for you to find the one that is right for your circumstances.
The cheapest interest rate is going to be derived from an equity loan on your home, but if you only few a small amount of cash, you may want to consider a boat or motor home in which you have equity.
Not only are those sources quicker for smaller loans, they are easier to obtain.
However, if the amount of funding needed is substantial, an equity loan on your home will offer the cheapest rate with the best repayment term.
Remember, though, that different lenders offer different interest rates and payment plans, so it's important to make certain you make some inquiries before you commit to a loan.
Type of loan Another consideration is whether you want an equity loan or an equity line of credit.
If the purpose of the loan is a small amount, and you don't have equity anywhere but in your home, you might consider a line of credit instead of a loan.
With a line of credit, you are approved for a maximum amount and can draw against that amount for a specified number of years without renewing it.
Unlike a loan, the payments on a line of credit are a percentage of the outstanding balance just like a credit card payment.
A line of credit also allows you to draw on more funds later if needed without having to return to the lender for more funding.
If a substantial amount of funding is needed for one purpose, a cash-out refinance may be the best option if the interest rate on equity loans is higher than that on a mortgage.
Since interest rates tend to fluctuate based on the state of the economy, it's wise to obtain current rates as close to the time you need the funds as is reasonably possible.
If you obtained a rate quote even thirty days ago, it's more than likely that the quote is no longer current.
You can also follow the business section of the local newspaper for current trends regarding interest rates for various types of loans.