Facts you should know about your Home equity loan
Home equity loans are a great source of cash. However, before you plunge right into the process of drawing out a loan out of the equity of your property; you should take a look at the fine print and what it means to you.
Are you debating on getting a home equity loan? Home equity loans might be an easy to acquire type of loan, but somehow even a seemingly great deal might turn out to be bad if the process of getting one is not done right.[I:0:J]
What areas of home equity loan do we need to know? Let us look at the following.
Points
How are you affected by this? Most lenders charge a part of the loan for commissions for themselves and for their sub-agents. Actually such points vary from little to exorbitant; it all depends on the company. If you are charged 1 point, this would mean 1 percent of the loan. And so 1 percent of a 100,000 dollar loan is an up front charge of 1000 dollars. Do not worry, there are lenders that do not charge points.
Loan interest rate terms
It it a fixed or variable loan. A fixed rate means you pay the same amount every month for the life of the loan. But on the other hand, if you have variable type of loan, you may actually have an initial good interest rate. Interest rates that go up naturally makes your monthly payments go up too in the process. So what do you want " a home equity loan with interest rate that stays the same all throughout the duration of the loan, or one with the possibility of going up anytime? Understand that more often then not, a variable loan starts out one or two percent lower then a fixed rate. The big question is where does it stop once it starts to adjust?
Pre Payment penalties
Simply put pre payment penalties are a fee that the lender places on you in the event you decide to pay of your loan early. These "pre-pays" can cost several thousand dollars in some cases.
Late pay fees
In some cases, while you may have a low interest rate, you may have a clause in the contract for the loan that will increase your interest if your late on a payment. In most cases this can add up to several thousands extra over the life of the loan.
Insurance
One thing you want to check for is if the home equity loan that you are prospecting has insurance costs hidden somewhere, a cost that you definitely do not want. Whenever you get a loan, you can take in corresponding credit insurance. You can have credit life insurance, which takes care of your loan in the event that you die. However, if in the case of home equity loan, if you feel that insurance is just added cost, then by all means avoid the lender that requires you to pay for them.
Are you debating on getting a home equity loan? Home equity loans might be an easy to acquire type of loan, but somehow even a seemingly great deal might turn out to be bad if the process of getting one is not done right.[I:0:J]
What areas of home equity loan do we need to know? Let us look at the following.
Points
How are you affected by this? Most lenders charge a part of the loan for commissions for themselves and for their sub-agents. Actually such points vary from little to exorbitant; it all depends on the company. If you are charged 1 point, this would mean 1 percent of the loan. And so 1 percent of a 100,000 dollar loan is an up front charge of 1000 dollars. Do not worry, there are lenders that do not charge points.
Loan interest rate terms
It it a fixed or variable loan. A fixed rate means you pay the same amount every month for the life of the loan. But on the other hand, if you have variable type of loan, you may actually have an initial good interest rate. Interest rates that go up naturally makes your monthly payments go up too in the process. So what do you want " a home equity loan with interest rate that stays the same all throughout the duration of the loan, or one with the possibility of going up anytime? Understand that more often then not, a variable loan starts out one or two percent lower then a fixed rate. The big question is where does it stop once it starts to adjust?
Pre Payment penalties
Simply put pre payment penalties are a fee that the lender places on you in the event you decide to pay of your loan early. These "pre-pays" can cost several thousand dollars in some cases.
Late pay fees
In some cases, while you may have a low interest rate, you may have a clause in the contract for the loan that will increase your interest if your late on a payment. In most cases this can add up to several thousands extra over the life of the loan.
Insurance
One thing you want to check for is if the home equity loan that you are prospecting has insurance costs hidden somewhere, a cost that you definitely do not want. Whenever you get a loan, you can take in corresponding credit insurance. You can have credit life insurance, which takes care of your loan in the event that you die. However, if in the case of home equity loan, if you feel that insurance is just added cost, then by all means avoid the lender that requires you to pay for them.
About the Author:
Doc Schmyz has invested all over the US and Canada. He built a free free website shares Real estate investing information for all over the US. Find Real estate investing information by state
posted by Debt Consolidation Loan at
11:29 AM
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