In a sense, any loan you do using your home’s equity is an “equity loan”, but not all equity loans are created equal. There is a primary mortgage that can be fixed or variable, and you can also get a line of credit against your home. This acts as a second mortgage and is usually referred to as a “home equity line of credit”.
Lines of credit work just like a credit card, so I really don’t recommend them. The words from a banker used to be , “If you are an investor it’s okay”, but this is no longer the case. With home values being driven down, banks are reluctant to make the credit available, fearing that even those who may have had a good history won’t be able to pay it back in the future, so all lending is risky in a sense. Equity loans are right now almost a thing of the past, but you can still get them.
If you have a project in mind, then only borrow what you need, and be sure to get estimates for these things. Using the equity in your home is great because you can make your home work for you, but it’s all about balance and stability. Lender’s want to lend you the money on the equity you have, but they also want to know that you have the ability to pay it back.
Remember, equity loans are still available, but choose wisely and choose FHA. For more information on why you should go FHA, visit my website at www.fhaloansnow.net.
-Mayer Dallal
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment