Getting the Cash You Need With Home Equity Loans

By: Ajeet Khurana

Every month for the last few years you have paid your mortgage on time and when you look at your home loan statement you see that you owe the bank less and less. Many people need cash and they wonder where they can get it, many times the answer is staring at you from your mortgage statement.

More people are realizing that their home can offer them the money that they need to do a variety of things. Home equity loans allow for you to borrow from the equity, or value, that you have built into your home over the years of making your timely payments.

Home Equity Loans

There are many different home equity loans for you to consider. Not everyone will qualify for any of them as it really will depend on how long you have owned your home, how much equity you have built into it, and what your credit is like.

You also need to have a history of making your mortgage payments on time as this will help prove your credit worthiness. You may not be sure whether or not you will be approved and for many people it takes applying and just waiting for an answer to know for sure.

When you start looking into these loans you will find that there is the fixed rate loan, which is usually a lump sum that is given to the homeowner at one time. You can do whatever you would like with the lump sum including making home repairs, consolidating debt, paying for education, a trip, or a new vehicle. With this type of program you will repay the money over time, usually about ten years.

You should not confuse the fixed rate option with a HELOC, though. This is a variable rate funding option that works a lot like a credit card. A HELOC is a home equity line of credit and you are not given a lump sum, instead you are given a line of revolving credit so that you can withdraw the funds when you need them.

You can keep borrowing from this type of loan whenever you need it, but when the loan comes due it is due in full. A home equity loan or home equity line of credit comes in handy for a lot of homeowners who need cash now but don't want to use credit cards.

Whatever you need cash for; you will likely find that this is an affordable option for you. These loans are often referred to as a second mortgage, which simply means that if you defaulted on your home loan these would be paid off after the primary mortgage has been paid off.

Because this funding option is tied to your home, it should only be considered by responsible homeowners who know they will be able to make the payments. Paying off this type of financing program as indicated will do wonders for your FICO score and will allow you to get financial help when you need it in the future.

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