Home Mortgage Refinancing Can Be Of Great Help At Certain Circumstances

In a home equity loan the borrower uses the equity in the home as collateral to get loan from the lender

. Moreover, borrowers use the loans to help finance various major home repairs, medical bills or college education, and many others. Not to say a home equity loan creates a lien against the borrower's house, and reduces actual home equity which can be used further for similar purposes. Generally, home equity loans are considered second position liens.

Though home equity loan and home equity line of credit sound similar, there is a tad of difference between the two. Whereas a home equity credit line is a line of revolving credit with an adjustable interest rate, a home equity loan is a one time lump-sum loan which more than often comes in fixed interest rate. In home equity credit, the borrower can borrow up to 100% of the value of a home, less any liens and can pay back the same within 30 years.

Home equity credit is taken into consideration when granting a loan to borrowers by the mortgage lenders in the USA. Moreover, using a credit line to borrow against the equity in the borrowers home has become a popular source of consumer credit, not to say that mortgage lenders in the USA offer the home equity credit lines in a variety of ways. The interest rates too are of varied kinds, while some lenders offer variable interest rates, some are being offered in fixed interest rates.

Whether a home equity loan is suitable or not for a borrower has to be determined depending upon the specific requirements. Moreover, when a borrower needs to borrow money, home equity lines may be one useful source of credit. When a borrower has home equity credit he is given large amounts of cash at relatively low interest rates. Additionally, he may even be given certain tax advantages unavailable with other kinds of loans.

Now, the question can come forward is how much money a borrower can get from a home equity credit. Depending on the creditworthiness of the borrower and the amount of outstanding debt, home equity lenders may let a borrower borrow up to 85% of the appraised value of his home minus the amount he still owes on his first mortgage. A question should be asked to lender whether there would be a fixed time i.e. a draw period wherein the borrower can make withdrawals from his account.

There is no one solution for all in mortgage market and the same is applied in home equity loan credit as no one loan is right for every homeowner. A borrower can find most loans come with variable interest rates. While some other loans come in attractive low introductory rates, a few come with fixed rates. And, depending upon the specific requirement of borrowers, decisions should be made to opt for the best possible solution.

Moreover, consideration should be made there is no large one-time upfront fees. Besides there should not be closing costs, continuing costs, such as annual fees, etc. in the agreement of mortgage loan. Notwithstanding, when considering a loan, the borrower must consult mortgage brokers in the USA to know various terms recourse and nonrecourse loan, secured and unsecured debt, and dischargeable and non-dischargeable debt, etc.

by: Nancy Nancy

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