|
More
on Home Equity Loan.
Home
equity loans are most
commonly second position liens (second trust deed), although they can
be held in first or, less commonly, third position. Most home equity
loans require good to excellent credit history, and reasonable
loan-to-value and combined loan-to-value ratios. Home equity loans come
in two types, closed end and open end.
Both are usually referred to
as second mortgages, because they are secured against the value of the
property, just like a traditional mortgage. Home equity loans and lines
of credit are usually, but not always, for a shorter term than first
mortgages. In the United States, it is sometimes possible to deduct
home equity loan interest on one's personal income taxes.
Home
equity loans can be a great financial management resource tool when
used responsibly. They can be used for debt consolidation, home
improvement and more. But it is important for you to be aware that if
you default on the loan you could lose your home. For this reason, make
sure your that if you get a second mortgage your income is sufficient
to cover the monthly payments.
You
need to also be aware that there are some home equity loan scams being
perpetrated nationwide against unsuspecting homeowners. These scams
usually involve unscrupulous lenders who prey upon homeowners,
particularly the elderly and low income, who are desperate for cash.
What happens is the homeowners in their desperate plight ends up with a
bad credit home equity loan or home improvement loan in which the terms
are so outrageous that the loan eventually goes into default and the
borrower loses his home.
To
avoid being scammed, when shopping for a home equity loan you should
only choose trusted and established mortgage companies and lenders.
This is especially true when shopping for a home equity loan online as
there are thousands of second mortgage loan lenders competing for your
business. Some are legitimate lenders and some are shady characters
just out to make a quick buck by obtaining your personal information
and then selling it to the highest bidder.
Home
Equity Loan Fees.
Here is a brief list of
possible fees that may apply to your home equity loan.
-Appraisal
fees.
-Originator
fees.
-Title
fees.
-Stamp
duties.
-Arrangement
fees.
-Closing
fees.
-Early
pay-off fees.
-Others.
All these fees or costs are often included in loans. Surveyor
and conveyor or valuation fees may also apply to loans, some may be
waived. The survey or conveyor and valuation costs can often be
reduced, provided you find your own licensed surveyor to inspect the
property considered for purchase. The title charges in secondary
mortgages or equity loans are often fees for renewing the title
information. Most loans will have fees of some sort, so make sure you
read and ask several questions about the fees that are charged.
|
