As a homeowner, you are automatically building equity through time, which can be used to secure low-cost funds by obtaining a second mortgage. Through one-time home equity loans or a Home Equity Line of Credit (HELOC), these options are available for you to access cash for renovations, large purchases, or alternative debt repayment.
Home equity loans and HELOCs are secured against the value of your property, which allows lenders to offer lower rates than other types of loans.
A HELOC is a specific amount of money that can be used at your discretion. Similar to a credit card, these loans are repaid over time. However, they accrue lower interest rates on outstanding balances, and these loans are accompanied by variable interest rates and serve as a revolving source of funds that you can access whenever you choose through online transfers, checks, or credit cards connected to that account. There are few, if any, closing costs associated with HELOCs, and untapped funds do not charge interest.
Home equity loans are often given as large lump sums of cash, often accompanied with a fixed interest rate. These are good for individuals who need money for a one-time expense such as a wedding or home renovation. These loans generally exceed $35,000 or more. Closing costs associated with the first mortgage also need to be paid, such as loan-processing fees, origination fees, appraisal fees, and recording fees. Prepaid interest might also be required at closing.
These loans use your house equity as collateral by calculating the difference between the value of the home and the mortgage balance. The downside to these types of loans is that lenders typically place a second lien on the home, giving them rights to it – along with the first mortgage lien – if there is a default. The more the borrower obtains, the more they are at risk.
Mortgage brokers generally have the best deals on home equity loans due to their ongoing relationships with lenders and investment pools. If you need extra cash, a second mortgage can be a realistic option. Lenders might be willing to offer lower rates because they are secured against the your home’s equity. Remember to calculate the extra loan payment and factor it into your monthly budget, and don’t go into default, or your home could be at risk of foreclosure.
If you’re looking for fast cash, you’ve come to the right place! Contact the experts at EB Mortgage to get started today.
EB Mortgage is a locally owned mortgage company with experts in new home purchase, refinancing, and commercial loans. Our wholesale rates can’t be beaten. We offer more products, more options, and more solutions. Our “3C” Process is simple: complete our pre-approval request, consider options based on your requirements, and choose the offer that suits your needs best. Call us or e-mail us today! Written by the digital marketing team at Creative Programs & Systems: https://www.cpsmi.com/