Home Equity Line of Credit
As a homeowner you already realize that one of your most valuable assets is your home. As you make your regular mortgage payments, the amount of mortgage you owe goes down which in turn means the amount of equity you have in your home goes up. Many home owners don’t realize that they can tap into this equity to get a low rate home equity loan. A home equity loan (also known as a “home-equity” loan or a “home equity” loan) is another name for a second mortgage. It lets homeowners leverage the equity in their homes by borrowing money against this equity.
Types of Home-Equity Loans
There are two types of home equity loans – a fixed-rate loan and home-equity line of credit (also known as a HELOC). Both have the same end result but are structured slightly differently. Both types of loans have a set term and at the end of the term the outstanding amount is due back in full.
With a fixed-rate loan www.torontomortgagetrends.com gives you the borrower, a single, lump-sum payment. This loan is then paid back to the lender by the borrower over a set period of time based on an interest rate in the market at the time. The main point to note is that your payment and interest rate will remain the same over the lifetime of the loan.
Think of a home equity line of credit or HELOC, just as you would of a credit card. You have a predetermined spending limit and you may use any amount up to this limit, at any time. Your payments will be based on the amount, type of HELOC and could also vary with the interest rate of the market at the time.
What’s in it for you?
The biggest benefit to you as a homeowner is that the interest rate you pay on a home-equity loan – even though higher than that of a first mortgage – is going to be much lower than what you would pay on a credit card or other consumer loans. So if you carry a large credit card balance each month, it may be worth your while talking to a www.torontomortgagetrends.com specialist to see how we can save you money on your monthly carrying costs. We can help you get a home-equity loan to consolidate your debts into a much lower single payment.
What to watch for before you take out a home-equity loan
All too often borrowers fall into a cycle of spending, borrowing, spending and then falling deeper into debt. If not handled carefully, a home-equity loan could put you deeper into debt that before. In some cases home owners can end up with more debts than the value of their home and that can possibly lead to a slippery slope towards bankruptcy.
Before you apply for a home-equity loan take a reality check. Ask yourself how you will use the money borrowed? Are you going to use it to pay of previous debts that have a higher interest rate or are you going for that luxury item that you don’t really need?
At www.torontomortgagetrends.com we will help you review your financial situation before you borrow any more money. We will evaluate the pros and cons of borrowing for your current situation and advise you in making the correct decision that works for you. Our goal is to make sure that you fully understand the terms of the loan and your ability to comfortably make the payments without compromising other bills. Call us at 647.267.6338 to get a quick and easy consultation or apply online and one of our staff will contact you promptly.