Home Equity Loan

Home Equity Loan
Home Equity Loans are types of loans based on the value minus liens on your home. Interest payments on a second mortgage may be tax deductible. They come in two varieties: the traditional second trust deed (mortgage) and a line of credit, a great way to payoff debts. A way to pay bills over a long period of time. It's much better than a second mortgage, lower interest rate, interest only loan, and is open as long as you want. It's a great way to access your money. Another great thing is to avoid Private Mortgage Insurance or PMI.

The advantages of a line of credit include:

• Low interest rates because (a) the loan is secured by a home, and (b) it usually bears a variable rates.
• No Closing cost fees for this type of mortgage (appraisal, title work and closing) with a first mortgage.
• No processing fees. There is no need to go through an application and incur fees each time money is borrowed.
• Convenience. A check may be written only when money is needed. Interest is charged only on the amount borrowed.

Pitfalls of the other home equity loan or second mortgage include: See Mortgage Programs

• High points. Points imposed on a second mortgage or (HELOC) is based on the amount of the credit line, not on the amount actually borrowed. Many HELOCs have no caps on interest rates.
• Long payback period. It is convenient to have to pay a small minimum amount each month, but stretching out the mortgage payback period usually means higher interest rates.
• High balloon payment. Some businesses require a large balloon payment of the principal at the end of the loan period.
• Risk of home loss. Unlike other businesses, there is a risk of losing a house. It may be difficult to sell your house fast enough and at a fair market value to be able to meet the balloon.
• Frivolous spending habit. One may get into the habit of spending on unnecessary things.

Home Equity Loan is commonly used for?

• Debt Consolidation to Lower Payments
• Pay for improvements
• Pay for major purchases
• Pay for education costs
• Investments
• Operating capital for business

Line of credit interest may be tax-deductible (Consult your tax advisor) and it can even lower your monthly debt payments when you use it for debt consolidation.

Other Exclusive Benefits:

• Low introductory rate
• Revolving line of credit accessible by simply writing a check or using the Lender Platinum MasterCard®
• 20-year term to meet your needs both now and in the future
• Interest-only payments based on your outstanding balance—you only make payments on the amount used.
• Fixed Rate Lock Option, which allows you to lock in a fixed rate, fixed term and fixed payment on a portion of your line of credit
• 24-hour online access, automatic bill payment and more.

Your HELOC Loan is a interest only loan. If you have an equity loan for $50,000 and your interest rate is 5.50% (Prime Rate) for 20 years.

($50,000 x .0550 / 12 = $229.19

• $50,000 (mortgage amount)
• 5.50% (.0550) (mortgage rate)
• 12 Months (number of payments for the year)
• = $229.19 (Interest only monthly payment amount)