Search:

Tips on Home Equity Loans

Offers for home equity loans are widely advertised. Lending institutions make it a point to highlight the advantages any potential borrower shall have in getting this kind of loan. One reason for the aggressive offer is that, with the home equity as collateral, this kind of loan is safer business for the lender than the credit cards.

The aggressive campaign sometimes makes the potential borrower think only of what are highlighted and forget, to their regret later, the so-called fine print in the loan terms. In putting the house at risk, the owner-borrowers owe it to themselves and the family members to make sure they are making a decision they can handle.

The biggest risk of a borrower is the lack of understanding of the loan terms. Here are some of the information any borrower should take time to be well versed of:

Tips to the Borrower:

* Have a clear idea of the reason for the loan. Is it a one-time or ongoing financial need? This is needed to decide if the loan should be Fixed Rate or HELOC (Home Equity Line of Credit). Be sure to choose the appropriate loan package.
* It is a good idea if the take out would go directly to the party whom you want to pay with the loan. This would minimize the risk of spending the money for something or somebody else.
* Ask for an official list of fees and interests before going further with the loan negotiation. Some agents conveniently fail to mention some fees like the closing costs and prepayment fees. Closing costs and prepayment fees are important information just in case the borrower decides to make advance payments later.
* Be wary of scams. Some lenders may appear to be assisting the borrower to have a good deal by approving loans that are more than they can afford to pay but actually, the borrower is being led to the road of payment default and consequently foreclosure.
* Research before signing anything. Contact people who have taken out loans from the lender. The Better Business Bureau is a good source of information regarding good business practices.
* Don’t be misled by the low amortization. It may not even be enough to cover the monthly interest and the consequent is a surprise after years of payment that the principal of the loan is not yet paid.
* Don’t be afraid or ashamed to ask about anything that is not clearly understood. In fact, any items that seem to be subject to interpretation should be confirmed with the lender.
* The Truth in Lending Act gives the borrower the right to cancel the loan by informing the lender in writing within three days of issue.

The home equity loan is an excellent and tempting source of cash for the home owner. The lenders consider it a safe investment but the opposite applies to the home owner.

Yes, there are advantages like the tax-deductible, lower-than-the-credit card interest and the convenience since you can apply on line and agents are eager to do business. However, the collateral’s value is more than what the appraiser reports. The appraiser has no idea of the true value of a home.

If ever a home owner finally decides to have that home equity loan, it should only come after a careful study of the pros and cons of the decision.

Article Source: http://www.topicinfo.com

LoanGuru.org and HomeEquityLoanStore.org provide professional financial services with free quotes form multiple lenders: equity loans, equity loan, loan guru and other types of loans for any individual’s financial needs.

Please Rate this Article

Not yet Rated

Click the XML Icon Above to Receive Loans Articles Via RSS!

Additional Articles From - Home | Finance | Loans

The Car Buying Tips - By : Auto Finance
Payday loan – fast help for your finance - By : Timothy Pokora
Home improvement loans at competitive rates – the best way to add value to your home - By : Clint Jhonson
How to Reduce Student Loan Debt - By : Student Loan Consolidation Programs
Tips to Apply Successfully for Funding - By : Antony eldwin
UK School Loan Consolidation - What You Need to Know - By : MauiNick
Preferred Payday Loans - By : Douglas Reynolds
Everything You Need to Know about Financial Aid in 9 Paragraphs - By : Daniel Z. Kane
College Loan Consolidation - What You Need to Know - By : MauiNick
While Opting For Home Equity Loans, One Must Be Aware Of Scams - By : Robert Thomson

	Print This Article
	Post Comment
	Add To Favorites
	Email to Friends
	Ezine Ready

Submit Articles
Member Login
Top Authors
Most Popular Articles
Submission Guidelines
Ezine Notifications
Article RSS Feeds

About Us
Submit Link
Contact Us
Privacy Policy
Terms of Service