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first horizon home loans & maine
Home Equity Loans - Are They Right For You?
Copyright 2005 Dean Shainin
The bills are out of control and you need a new car. Maybe we can get a new carpet and paint the house, you say to yourself. These are just a few reasons why home equity loans can seem like the solution to all your problems and are so popular.
Home equity loans can be a fantastic way to start your own business or to take advantage of an investment opportunity. They can also make your situation worse than it was before you got the home equity loan.
The reasons for taking advantage of home equity loans are the most important part of the process. Take the time to sit down and ask yourself, Do I really need a home equity loan? Do I want to go on a spending spree or am I really trying to improve my life?
A home equity loan is like having a second mortgage on your home. Suppose your home is worth $200,000 and you have a mortgage against it at $150,000, you will have $50,000 of equity available. Home equity loans allow you to borrow up to 80%, and sometimes more in certain situations, of your home value. In this situation you could borrow $80,000 as a home equity loan and still have only borrowed 80%.
This is why it is so important to take a good look at your situation before making a decision. You can see how easy it could be to get carried away with home equity loans.
Lets say you only need $20,000 for that new car and some home improvements. You decide to borrow another $15,000 of equity for that vacation to Hawaii you have been dreaming about. First of all, a vacation to Hawaii would not cost $15,000 unless you went on a first class, spare no expense vacation.
Using a home equity loan to buy a car may not be a great idea with todays 0% interest rates and no money down loans. There is no sense in risking losing your home to buy a new car with these type of loan programs that are available in todays market.
On the other hand, a home equity loan for home improvements may be a great idea. This will add value to your home as long as you can afford the higher loan payments.
A business thats doing great that you want to expand may be another good use of a home equity loan. As long as the business is already in profit and is not losing money.
Some solid investments can be a good idea if you have done your research before hand. The latest IPO may or may not be a great idea.
Consolidating high interest credit cards may be a great idea as long as you close the accounts and dont run them back up. You really only need one or two credit cards in case of an emergency.
Educational expenses may be a good reason to take a home equity loan to get your children started in the right direction. Someday this type of an investment can pay off.
These are just a few things you can do with home equity loans. Its very easy to borrow too much, only to find yourself having a tough time making the new payments.
The important thing to remember with home equity loans is to be logical and dont let your emotions get the best of you. Again, take the time to sit down and research all your options. This way you can rest well at night and not have to be concerned about losing your home. You can enjoy the things you do with your home equity loan knowing youve made a wise decision.
About the Author
Dean Shainin is a consultant specializing in home equity loan strategies and home mortgage loan information. To see a list of recommended home equity loans, advice and information, visit this site: HomeMortgageLoanTips
More Useful Resource and Updates on first horizon home loans & maine
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MORE than 40,000 unlucky people have been caught out in a fixed mortgage rate trap, having taken out their loan at the highest fixed interest rates in a decade, denied any saving from the recent cuts and confronting costly break fees if they decide to refinance.
- Bernanke urges action to halt foreclosures (Reuters via Yahoo! News)
Federal Reserve Chairman Ben Bernanke on Thursday urged more aggressive steps to halt home foreclosures and said government-funded programs could help strapped homeowners.
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If Treasury Department approves plan, said one mortgage broker, 'We would have everybody and their brother who had equity in their homes coming to refinance. That would be an amazing influx of loan applications. It would keep things going for a long, long time.' Rates drop to 11-month low Bernanke: More foreclosure help needed Real estate news | Economic crisis news
- Fixed-rate trap snares home owners (Sydney Morning Herald)
More than 40,000 unlucky Aussies are being denied any saving from the recent interest rate cuts.
- Opening the tap on home equity (Austin American-Statesman)
Borrow before credit line is frozen, some suggest. Many homeowners who have taken out home equity lines of credit have learned in recent months that these loans are not as useful as they initially seemed.
- Kiwibank Responds To OCR Cut (Scoop.co.nz)
Kiwibank has reacted immediately to the cut in the Official Cash Rate by reducing all home loan rates. The bank is now offering a one-year fixed rate of 6.49% p.a. and a variable rate of 7.45%.
- (AFX UK Focus) 2008-12-04 16:30 Bernanke - need to do more to halt foreclosures (Interactive Investor)
WASHINGTON, Dec 4 (Reuters) - U.S. Federal Reserve Chairman Ben Bernanke on Thursday urged more aggressive action to halt home foreclosures, and said write-downs of principal may need to be part those efforts. "Despite good-faith efforts by both the private and public sectors, the foreclosure rate remains too high, with adverse consequences for both those directly involved and for the broader ...
- Consumer Loan Rates (The Springfield News-Leader)
Springfield financial institutions quoted the following rates Friday for home equity, auto and boat loans. The home equity rate is based on a $10,000 loan or line of credit with applicable points included. Rates are variable unless otherwise noted. Additional fees are not included. The auto loan rate is based on a 48-month contract for a new car. The boat rate is based on a loan for a new boat.
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