If you own a home or real estate, you could potentially refinance your mortgage or take out a home equity loan. If you have equity in your home, then you could refinance your existing mortgage, to cashout and take advantage of low mortgage interest rates. A cash out occurs when you refinance your old mortgage with a larger mortgage, so you can cashout equity that has accrued in your home. Or, you can take out a home equity line of credit. You can get a home equity loan even if you don’t have equity. Equity is the difference between your home’s appraised value and your outstanding mortgage balance.
A home equity line of credit is secured by the equity in your home. It is a revolving line of credit. As you pay back what you borrow, the money is yours to keep using. The rates, like your mortgage or interest rates, are determined by credit scores and combined Loan-to-Value ratios.
A home equity loan (or cash out, if you refinance) will reduce future equity available in your property. However, you do not need equity to qualify for a home equity loan. Some lenders will pre-qualify you for a home equity loan of up to 125% of your home’s appraised value, with good credit. A home equity loan is secured by your home’s appraised value. Home equity loan products usually have higher interest rates than a first mortgage. Compare home equity loan costs to your credit card interest rates. Then figure in the tax savings on your home equity loan, and you’ll see why a home equity loan makes sense.
Another option is to refinance your first mortgage to take advantage of today’s low interest rates. Several factors determine whether you can refinance: interest rates, the cash out, or the size of mortgage, your credit score, existing mortgage terms, debt to income ratio, income, and current interest rates. Your new mortgage could be for a higher amount, so you would be able to cashout equity that you already have in your home. You’ll then pay the interest rates on the new mortgage after you refinance. Even though the mortgage would be larger, the lower interest rates may compensate. Interest rates are at all-time lows but they will eventually rise. The same is true of home equity loan rates.
To secure a home equity loan or refinance, first you must qualify. It may also take 10-20 years, depending on the balance or interest rates, to repay the home equity loan. A mortgage can take 30 years to repay. You can use the cash out to eliminate your debt, but you will be paying back the full amount of these balances. The bottom line is, you will be exchanging your unsecured debts for a home equity loan, secured by your home. If you default on the home equity loan or fall behind on your mortgage, the lender can foreclose on your home. That’s why a home equity loan is really most suited to stable borrowers. The average home equity loan customer is 35 to 49 years old with a household income of $83,998, according to the Consumer Bankers Association. Missing payments on your mortgage or home equity loan could cost you your home or the collateral you pledged for the home equity loan.
If you cannot qualify for a home equity loan, don’t have enough equity for a cash out, or are worried about rising interest rates or refinancing your mortgage, our qualified debt reduction company may be a viable alternative. We will help reduce your debts to a manageable level, so you don’t have to secure a home equity loan or risk your mortgage. Nationwide Debt Reduction Services is the right alternative to your debt burden. Find the Right Debt Relief Solution, Start with a FREE Debt Analysis Call Toll Free (888) 987-1325
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Find the Right Debt Relief Solution, Start with a FREE Debt Analysis Call Toll Free (888) 987-1325