Secured Home Equity Loans

By: Marsha Claire

Certainly, most of us are aware of the value of an owned home in the loan market. The weight it carries with it in the approval process and also in determining interest rates and loan terms is rather significant. In fact, your home is the best collateral you can offer for any secured loan.

Secured Loans are loans we take by placing an owned asset with the lender to assure him/her of repayment. Collateral acts as a guarantee. In case you default on your repayment schedule, i.e., fail to repay your instalments in full and on time, you risk losing your collateral asset to your lender. Your lender in turn, has the option of reimbursing the amount he loaned to you through your collateral. He can also chase you through the legal system. Collateral does not have only a negative side. Along with it, you also get lower interest rates-that reduce your entire loan expense, customized loan terms over which you can leisurely repay your instalments and also larger loan amounts, assisting you in your financial crisis to a greater extent.

SECURED HOME EQUITY LOANS are loans you take by offering your home as collateral. While verifying your collateral, a lender usually checks for the equity in your asset. Equity is the total value of your home that has already been paid. In case you own your home outright, you can borrow an amount equal to the total value of your home and sometimes even 125% of its value. In case your home's on a mortgage, you can borrow that amount (of the mortgage) that has already been paid for. When you borrow this amount, pledging your home as collateral is compulsory. In exchange you are offered several benefits, mainly low interest rates. This is exactly how Secured Home Equity Loans work.

Shopping around for your loan is as essential as shopping around before buying a new home. Every lender you approach will have a better offer to make, considering the fact that you are offering your home as collateral. A home is looked at as high-value collateral and therefore every lender will only have benefits galore for you. Approaching lenders you've worked with earlier, taking referrals from family and friends, looking online are some of the best ways of finalizing your lender. Take time to shop for your Secured Home Equity Loan.

Things that you need to clarify with your lender include hidden costs, total interest, total expense on the loan, your repayment term, net instalment amount, etc. A point of clarification is that you can continue living in your home while you repay the amount. Offering your home as collateral does not take your home away in any way, unless of course, you cannot repay the loan amount. So go ahead and support your financial crisis while enjoying the comfort of your home.

Home Loans
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