Home Equity Loans - An Overview by Joseph Pritchard

We often need liquid cash but sometimes we are badly in need of a lump sum amount that our savings or monthly income cannot meet all of a sudden. In this situation, people are often left with no other options but going for home equity loans.
A home equity loan allows you to borrow money against your home equity as collateral or guarantee. In other words, a home equity loan allows you to turn what you have already spent for your house into cash.
It is not very hard to get this loan as lenders feel more secured when you are offering your home equity against the borrowed amount.
A home equity loan comes with some other benefits like they normally have a lower interest rate in respect to other loans. There are a lot of people who apply for a home equity loan to consolidate some high interest debt taken earlier.

Even if you have a previous bad credit record still you can qualify for such a loan though the process may not be very smooth and all depends on your lender and agent's relationship.
With a home equity loan, you can get a lot more amounts in need than other loan terms and to add to this your equity loan repayments may fall under tax deduction. We also come across people who apply for such loans to finance a second home or remodeling.

Normally you get 15 years of time for repayment however this can be extended up to 30 years depending on circumstances. However it is always advised to plan your repayment options beforehand depending on your average monthly income that you can bank upon. If necessary and your budget permit you can go for an insurance to cover up the loan amounts if something turns out otherwise.

You may also look for a loan that comes with a prepayment penalty so that you can get rid of your debt as soon as you can.

However, an honest professional can provide you the best solution depending on your exact situation and can bring out the best bargain for you. It is always recommended to consult a professional before opting for a home equity loan as he or she knows the present market rates and pitfalls better than you.

About the Author
Joseph Pritchard is a loan consultant with years of experience in banking and financial sector. For more information on home equity loan, bad credit home loan, mortgage refinancing and Texas home loans he reco

Using Home Equity Lines of Credit as Bridge Loans by Dan Lewis

If you decide to sell your home, you most likely are going to want to buy another one. This process is known as stepping up in the market, but can lead to financing problems.
Selling and buying homes can be a bit stressful to say the least. If you recall the process of buying your first home, you know this is more than true. Now that you are going to both sell your current home and buy another, you are going to have twice the stress. There is also another problem that may arise. It is known as the financing gap.

When you sell a home, the transaction will close upon an agreed upon date. At the same time, you are going to be trying to buy a home that will close on or near the same date in question. At least, that is how you should try to line it up. The problem, of course, is coming up with money for the new purchase. You may have a lot of equity in your first home, but it is in a non-liquid form, to wit, you can't spend it. When you need to put down an earnest money deposit or down payment on the new home, how do you come up with the money?

The typical answer for filling this "financing gap" is to get a bridge loan. A bridge loan is a short term loan of two to three months that gives you the liquidity required to purchase the new home. Sound great, right? Well, short term loans are infamously expensive. Points and fees are, frankly, outrageous. So, is there another solution?

One option is to try to use your home equity line of credit. A line of credit on your home is just what it sounds like. It allows you to tap your equity in the home, often through a checking account. If you actually sell the home at some point, the line becomes due immediately upon closing. That being said, you can still time out the sale and purchase real estate transactions to use it to provide financial assistance with your new purchase.

Assume I list my home for sale on March 1st. I also go out and start house hunting and applying for pre-approval on a new loan. I reach an agreement to sell my home on April 1st and also reach an agreement to buy a home on April 3rd. The problem is I have nominal amounts of liquid money. I can access my line of credit to pay the deposit and down payment on my new home. When the sale of my previous home closes, the equity line is paid off when the buyer funds the transaction. By taking this step, I have effectively used the equity in my own home to buy the new one and avoided paying high fees and costs with a bridge loan.

About the Author
Dan Lewis is with Great Western Mortgage - providing California mortgage loans.