What to Look For When Selecting HELOC Loan

Once you decide to take the equity out from your house, among the best tools on hand could be HELOC, the home equity line of credit. If you have equity in your home, it gives you access to funds, and a means to decide how much cash you use. Not each HELOC program, though, is same. Here are few things to anticipate while you begin searching your loan.HELOC Loans are an outstanding means to capitalize on the equity in your house. Because you’re not paying off interest on whole of the cash – just on amount you use. It makes a convenient way to utilize the equity – if and when you require it. Throughout the draw time, you’ve unrestricted access to the funds. Also HELOC Rates are mostly lower than other loans.Prior to signing the contract for a HELOC loan, you must recognize that it’s essentially a second mortgage. This implies that it would add other payment every month and you want to know beforehand how much it may be. You ought be capable to easily make the payment without producing a great deal of a financial stress.With HELOC loans, you’ll as well have varied closing fees and additional costs added once you sign up for the loan. Among these, you’ll as well normally incur an assessment fee, an inspection fee, and others. Few of these might be forfeited, just you’ll require to recognize what all of the fees are for. Monthly and yearly charges might as well apply – depending on the specific financial institution. You must to inspect carefully every one of the charges to make certain you understand precisely what every fee is for.The interest is additional matter that you ought to devote careful attention to. HELOC Rates are mostly adjustable, based on movement of prime rate which implies that the defrayals are flexible and may often fluctuate. Determine how frequently the rate of interest is computed in order to acquire the most favorable rates. It’s not unusual for the rates to be computed every day basis, and occasionally on a monthly basis.Numerous HELOC Rates as well have a margin, which is essentially additional charge on top of the interest rate (APR). The matter is that you’ll typically not be said what the rate of interest is – except when you inquire about it. There may be some a fluctuation in the margin rates – so make certain you enquire about it, and don’t accept it for given that it would be low-set with that specific lender.You’ll as well would like to know how the HELOC Loan will become amortized. A few of these bear balloon defrayals that are collectable at the close of the access period. Your lone alternative might be to refinance. Frequently, however, your amortizing defrayals are put together at the close of the draw time, and you merely begin paying until the mortgage is paid off. Check out whenever you’ve the choice to automatically renew your HELOC, because few banks may make that for you.

Guides in Choosing Hel Versus Heloc

Have you ever felt the need of extra money for home improvements or repairs? Or are you in search for consolidation of your credit card debts because you are retrenched from work? Or are you in need of money for the college education of your children but you can’t afford to? Well then, applying for a loan is the best move you can do. A loan is identified as squeezing money with collateral conditions. Collaterals may be in form of any property that you own. Those properties serve as a surety for the loan you will acquire later on. They will serve as guarantee that you will pay for the loan you have applied for. If in the future you will not be able to pay for the loan, its principal and interest, you will have to surrender those collaterals or properties to the lending investors as a payment for the loan you haven’t paid for. Home equity loans (HEL) and home equity line of credit (HELOC) are the best types of loan to apply for and it’s a matter of sacrificing your homes as collaterals. Home equity loans and home equity line of credit, are of course have differences in terms of usage, terms of payment and interest rates. Home equity loan rates have fixed interest paces. This means that you will have to pay for the principal and interest of your loan at a steadfast manner or the so- called

How a Heloc Can Work for You

If you are looking for funds to do home improvements, a Home Equity Line Of Credit could be just the thing to carry your renovations through. Like all loans and lines of credit, this form of financing comes with its risks and concerns. However, when used wisely, this type of loan can enable you to increase the value of your home beyond that of your initial investment.It is wise to have a professional guide you as to whether a HELOC is the right choice for your situation. Whether or not you choose this kind of home-improvement loan, you should have a detailed plan for how the money will be spent. This plan should include the perameters of the project you are planning, estmated costs, the results of interviews of various companies (you should interview several), allowances for incidental costs and unexpected drawbacks and your goals for the finished project. You should also have a solid financial plan for paying back the HELOC on time, every time. This kind of loan is more like a line of credit. Instead of having the entire amount dumped into your lap, you can draw on the amount for a set period of usually 5-10 years. During this time you only pay interest on the amount you’ve withdrawn. Repayment periods are usually 10-20 years.If you’re looking to pay off credit card debt or other bills, think twice about a HELOC. Unsecured debt is bad, but secured debt – where your home can go into foreclosure if you can’t pay up front and on time – is much worse. Don’t use your home to finance luxury consumables, like vacations or new cars. The HELOC is intended to improve your home; use it for this purpose.Assuming that you want to make some home improvements, the HELOC can help you in several ways. It’s a very low-interest loan that is lower than any mortgage. In most states, you can write off the interest on your taxes. Finally, if you are using your money carefully, you can increase your home’s equity almost immediately if you know what improvements to make.Kitchen and bathroom improvements are generally the first and best places to start for a return on your investment. If necessary, consult a professional about what improvements will likely increase your home equity the most. Before you obtain a HELOC, it is wise to get an estimate of the cost of a renovation. Carefully research your contractors and related professionals before hiring them or signing any agreement.The major drawback of a HELOC is the variable interest rates. HELOCs have a variable rate that fluctuates with the prime rate. The prime rate changes in past years have been to as low as 4% and as high as 20%. Consider how you’re going to pay back the HELOC. It isn’t free money and the payments must be allowed for in your future budget, as well as possible increases. Carefully consider the terms of the HELOC agreement before signing. Some lenders prohibit certain types of usage of the property, such as rentals, during the period of the HELOC. A HELOC can certainly work for those who have a clear project in their minds and who are financially stable enough to pay back the loan on time, in full. A HELOC can serve to minimize costs, as one only pays interest on what one has drawn out. The biggest caution about a HELOC is that it is tied into your home; missing payments can mean losing your house. Like any debt, a HELOC should be thought out carefully before acquired, but can realize big improvements in your house’s equity if applied to sensible improvements.

What is a Heloc?

What exactly is a HELOC? Let’s first define what those letters stand for: Home Equity Line of Credit or Home Equity Line. This type of loan allows the borrower to write checks or pull cash out against their home equity up to a certain, predetermined amount.

By comparison, a conventional loan is paid back over the loan term, while the borrowed money is either given to the borrower or used to payoff a previous mortgage, credit cards, student loans, etc.

A HELOC allows the borrower to withdraw funds up to a predetermined amount and the monthly payments will be based on the actual money withdrawn. For example, if you acquired a $50,000 HELOC on your home, you would be able to write checks against that credit line up to $50,000, at which point your HELOC would cease to allow you to draw against it. Your monthly payments would be based on the amount withdrawn from the credit line. If you only borrowed $20,000, then your monthly payment would be based on that amount.

A HELOC is often likened to a giant credit card with your home used as collateral. They are most often a second mortgage on a home, and are best used for temporary needs such as short-term financial help for your small business, paying for college, paying off credit cards, or even for home remodeling. A HELOC is also nice to have for a

How A Heloc Can Better Help You With Your Home Improvements

Making improvements to your home can be both fulfilling and yet expensive. By doing the project right, it can add many thousands of dollars to the value of your home. Getting the money, however and knowing the best and least expensive way to do it, can be more than a little confusing. One type of mortgage – a home equity line of credit, or HELOC, however, may be just the tool you need to get access to the equity in your home.
What Is A HELOC?
A HELOC is actually a type of second mortgage. An account is opened for you that allows you to get the cash you need. The equity you have in your home, and how much you apply for determine the amount of cash available. The lender will look at your credit report and ability to pay back the mortgage in order to give you a credit limit. Access to the cash is usually given by a credit card or checking account.
How Does It Work?
Instead of giving you the cash of the HELOC in one lump sum, it is put into your account and you are able to draw it out as you need it. There is generally a minimum draw that will need to be made, and a period established during which you can make the draws. This period can be up to about 11 years.
You have the choice about how much and when you want to draw out the money you need for your home improvement projects. If you choose not to use all of it, then that is up to you.
How Are Payments Made?
Payments are made on the interest as you go along. The nice thing here is that you only pay interest on the amount you actually use. Whereas, on a home equity loan, or any other type, you are paying interest on the total amount borrowed. So, if you do not choose to use the whole amount, then that means savings for you.
How Does It Amortize?
A HELOC will usually amortize in one of two ways. The first way is that you start making amortizing payments when the draw period ends. The whole term of the HELOC could be from 15 to 30 years, and the number of years after the draw period is how long you have to pay it off. A second way is that the whole amount may become due at the end of the draw period – as a balloon payment. This would require refinancing in most circumstances. At the end of the repayment, you may or may not have the credit extended to you again – depending on the agreement.
What Other Details Are There?
A HELOC is usually an adjustable rate mortgage. While some are now starting to be
offered as a fixed rate mortgage – most of them are not. You should also be aware that the interest rate is calculated daily in most cases. In addition, there is a “margin” that you need to find out about before you buy.
Making your home improvements with a HELOC can be a great way to tap into your home’s equity. Adding value to your home is a great way to use your HELOC funds, and it is also tax deductible.

Can a HELOC Help Pay Off Existing Debt Quicker?

With the current economy many people are asking the question, can a HELOC pay off existing debt quicker? Well, the answer to that question is not an easy one for many reasons. There are many things to consider when you are thinking about a home equity line of credit.
If all things are be looked at on a level playing field, I would have to answer the question as “yes.” But rarely is the playing field in our lives level. So there are other things you have to consider when you are looking for ways to pay off debt, especially if it is unsecured debt (credit card debt).
Let’s look at paying off debt with a home equity loan. First of all, this is a loan and will require you to be credit worthy. But most important of all the loan will be secured with your home. If you default on this loan, you are putting yourself in a position to have your home foreclosed on. There are other options that will help you get out of debt without putting your home at risk. I will get into those in a minute.
If you do opt for a home equity line of credit, you will most likely get an interest rate that is considerably less than the interest rate on most credit cards. Also, you will be able to deduct the interest paid on this loan on your taxes. You must also understand that more than 70 percent of all people that pay off unsecured debt with home equity loans have credit card debt again within a year. This leaves you with both a loan payment and credit card payments to make each month.
A home equity loan is not your only option for paying off credit card debt and personally, they are not something I would recommend to someone that has debt. Two better options are consumer credit counseling and a self-managed debt elimination plan. One of the best guides for getting out of debt is Larry Winget’s book, “You are broke because you want to be.” This guide tells you step-by-step how to set up a budget and manage your finances so that you can pay off your debt.
Consumer credit counseling is another option for paying off debt. This works best for individuals that struggle with being disciplined with managing money. Credit counselors will works with your creditors and consolidate your debts without another loan. You will make one monthly payment to the counseling agency and they will distribute it to your lenders. Your fees will be eliminated and your interest rates reduced. Your credit card accounts will be closed and you will not be allowed to open new ones until, you have completed your debt management plan. Most plans last no longer than five years.

Interest Rate Manipulations and the Governments Role in the Foreclosure Crisis

With the possibility of an economy-wide recession becoming clearer every day, and the realization by more and more homeowners that they are experiencing their own personal recession, the outlook for the housing market looks even dimmer than it did even a few months ago. So-called experts can be seen recommending that people spend money and buy to prop up the economy, but an attitude of instant gratification and overspending by both consumers and the government have led us to this economic situation. The problem of overspending should not be met with the solution of more spending.

Actually, spending too much money is exactly what caused some of these problems in the economy. During the real estate boom of the early 2000′s, when interest rates were manipulated downwards to provide economic stimulus after the tech bubble and 9/11, home buyers went out and spent as much as they could getting a home. With the artificially low interest rates, lenders gave every loan applicant as much as possible, believing the rising prices in the real estate market would take care of any potential foreclosure problems. Then the homeowners kept right on spending with their credit cards and HELOCs until they had all the cars, computers, and other consumer goods that they wanted.

But spending on credit means that, eventually, the bills will come due, and homeowners found that out the hard way when their subprime ARM mortgage rates increased. Then, in order to keep the mortgage on time, they had to miss a payment on this credit card or that personal loan, which drove up the interest rates on these loans. When a payment is missed, credit cards often drastically raise the interest rate, doubling or tripling the original, in some cases. Interest rates of less than 10% skyrocketed to 29.99% after a missed payment, and then the homeowners had to decide between paying the mortgage at all or paying the credit cards. In the meantime, collectors from all companies were calling several times every day looking for their money.

Factor in inflation due to government overspending and devaluation of the currency, and prices for transportation, home heating, and food were going up 10% or more per year. For homeowners who did not have to drive to work, heat their home, use electricity, or buy food to feed their families, the financial situation remained stable. For the rest, higher expenses translated into a decrease in the amount of income the homeowners could use for savings, paying down debt, or maintaining their current standard of living.

Thus, homeowners spent their way from a 6% mortgage rate to an 11% rate, and from a 10% credit card rate to a 29.99% rate. And in turn, the government also spent the homeowners’ way from the dollar being the reserve currency of the world to a tripling of oil prices and inflation rates of 30% in some commodities. After all, the government really does not have anything, except what they take from consumers in the form of taxation or inflation, or borrow from other sources.

And what about the savings that homeowners should have been putting away to meet any emergency? Well, that was nonexistent, as the savings rate in America has been negative for years now. Consumers spent so much, that they had to borrow even more money just to make ends meet and continue their spending. Of course, now, instead of borrowing for unnecessary items, they are spending borrowed money just to make their increasing payments on the mortgage and credit cards, while borrowing even more to spend for basic items like food and gas.

Government interest rate manipulation and inflation are the two main reasons for the crisis being experienced now. And the solutions that have been offered so far are simply more rate manipulations and inflation! This is like a doctor giving a patient a medication he is violently allergic to, and then prescribing more of the same medication to combat the additional illnesses caused by the medication in the first place. At some point, either the treatment will need to be changed, or the patient will die. For now, though, if we could get spending under control, and consumers saved even a little bit to get through financial hardships, the fear of recession would probably be much less, and the economic downturn itself would be less dramatic.

How Does a Fed Cut Affect Home Mortgage Rates?

Maybe you’ve been considering a refinance, and you’re waiting to move forward till the Fed takes action again. But be smart about waiting and watching. A Fed cut doesn’t directly affect long term rates (for instance a 30 year fixed mortgage), but it does impact long term mortgage rates. The problem is the impact might not have the result you’ve been waiting for.
Who is the Fed? Well, it’s really the Federal Reserve. And when the Fed cuts rates, it usually cuts the Fed Funds Rate, which is the rate banks lend each other money. However, when the Fed lowers the Fed Funds Rate, Prime Rate, the rate banks give their best customers, usually drops as well. Ok, that’s great. But what does that really mean to the average person on the street? It means that anything that has an interest rate tied to Prime is directly affected by the Feds’ rate cut. Typically, these are short term loans. For instance: a credit card or a Home Equity Line of Credit (HELOC). In general, these rates decline when the Fed lowers rates. On the flip side, a Fed rate cut means your savings will perhaps not yield as much interest and your CD (certificate of deposit) won’t be at such a great rate. So, it’s not all good.
Why aren’t mortgages directly affected? Because mortgage rates are typically longer term rates and are influenced by buyers and sellers in the bond market. Daily movements in the bond market cause mortgage rates to change. That’s why you might get a quote from a loan officer on Tuesday, and on Wednesday, your quoted interest rate has increased .125%. The Fed lowers rates to help stimulate the economy. Ultimately a healthy economy is good for the real estate market. Jesse Lehn, Senior Vice President for Mortgage Investors Group, believes,

How to Get a Low Rate Second Mortgage

You can improve your chances of qualifying for a low rate second mortgage by following a few simple steps. Before you apply for a loan, you should ensure that your credit history is clean, confirm you have enough equity to qualify, and determine which second mortgage is the best option for your needs and financial situation. Next you can shop for a low rate second mortgage lender and compare offers. With preparation, you may be able to close on your second home loan in as little as two weeks.

Confirm Your Credit History Is Clean

Even though you already own your home, prospective lenders will check your credit history to verify that you’re paying your current loan on time, haven’t recently taken on any large debts, and haven’t recently been delinquent on any debts or filed for bankruptcy.

Before applying for a low rate second mortgage, check your credit reports to make sure they don’t list any errors. If you have legitimate recent black marks, do what you can to correct them. Recent dings on your credit can result in a higher rate home equity loan. You should also check your credit score to see what rate you’re likely to qualify for.

Confirm Your Current Mortgage Balance and Home Value

When deciding how much money to borrow, you should first confirm that you and your primary lender agree on how much you still owe. If your numbers don’t match the banks, make sure all your payments have been processed properly.

You can use a variety of real estate websites to assess your home’s current market value. It may not be as much as you think if the market is on a downswing. A lower market value will limit the amount you can borrow against your equity. The combined balance of your first and second mortgages should never be more than 80% of your home’s value.

Determine Which Second Mortgage Option is Best

Before applying for a loan; decide what you plan to use the money for. Total up all the expected costs and add a little extra to cover unanticipated costs if you’re using the money for remodeling or college tuition, but not so much that you’re tempted to use the money for unrelated purchases. Remember that you are risking your home, so borrow wisely. Only borrow an amount you can afford to repay and only for items that will directly improve your home’s resale value, your financial situation, or your child’s or your future earning potential.

Once you’ve decided how much to borrow, you can decide whether a home equity loan

Or home equity line of credit is a better choice. A home equity loan lets you borrow a single lump sum and pay it back over time at a fixed rate. A home equity line of credit (HELOC) allows you to borrow smaller amounts when you need them and then pay them back over a period of time at a variable interest rate. If you’re consolidating debt or embarking on a small home remodeling project that will be completed quickly, then a lump-sum loan is preferable. If your remodeling project will take several months or you’ll need periodic college tuition payments, then a HELOC is a better choice.

Choose a Low Rate Second Mortgage Lender

Don’t automatically accept a loan from the first lender you find. Instead shop around on the Internet to determine what kind of second mortgage rate you can expect. You should approach two to three reputable lenders for estimates of your APR, fees, and other costs. When choosing your lender, compare all those factors and decide which is best. Once you’ve selected a lender and begun the application process, your preliminary work should help the process go smoothly and quickly.

For more articles and suggestions, visit http://www.bills.com/low-rate-second-mortgage/

Lowering as Much as Possible a Home Equity Loan Rate

Comparing rates from different lending sources is known to be amongst consumers, the preferred way to find the best rate for a home equity loan. By obtaining multiple offers, you have good chances of getting a decent rate; there are several actions you can take to help you get the lowest rate possible.

Doing your Best to Obtain Prime Rates

Being labeled as bad credit can be frustrating and cost expensive in times when cash advance is needed. Therefore, if you have the time to improve your credit ratings prior applying for a Home Equity Loan, do so.

If you have been labeled as bad credit because of one specific credit problem but usually your credit score is good and always make payments on time, let the lender know about it. Writing a letter and explaining the situation will help, if you can provide pass bank statements showing you are in good standards will add some positive judgment to the decision.

By applying for a shorter repayment plan you will lower the quoted interest rate. Make sure to compare several market lenders as well as other financial institutions and banks. This action will help you find the best deal available and don’t be shy to negotiate the rates, terms and fees, everyone does so!

Considering Other Factors That Contribute To the Total Cost of the Loan

Although the interest rates happen to be very important when obtaining a HELOC or Home Equity Loan, they aren’t the only factors. Some lenders offer great interest rates, but, very high fees. Try To make sure that the total cost will not be too expensive. Choose an equity lender after comparing several options from various lenders.

How the Prime Rate Works

If you are shopping for a new credit card, an education loan, a car loan, a business loan, a personal loan or a specific type of second mortgage called a home equity line of credit (HELOC) then you need to understand how the U.S. Prime Rate works.

On Wall Street and throughout the worldwide banking community, the U.S. Prime Rate is understood as the interest rate at which banks lend money to their most creditworthy business customers. Most American banks, credit unions and other lending institutions use the U.S. Prime Rate as an index or base rate for numerous loan products; a margin is added to the Prime Rate depending on how risky the lending institution feels the loan is: the riskier the loan, the higher the margin. However, since the Prime Rate is an index and not a law, business owners and consumers can sometimes find loan products that have an interest rate that’s below the U.S. Prime Rate.

The U.S. Prime Rate is determined by adding 300 basis points (3.00 percentage points) to the federal funds target rate (also known as the fed funds target rate.) So if the fed funds target rate is 5.25%, then the U.S. Prime rate will be 8.25%.

The federal funds target rate is America’s most important short-term interest rate, and it is controlled by a group within the U.S. Federal Reserve system called the Federal Open Market Committee (FOMC). The FOMC convenes a monetary policy meeting eight times every year to decide whether to raise, lower or make no changes to the fed funds target rate. The FOMC may also hold an emergency meeting at any time, if economic conditions warrant.

If the FOMC determines that the pace of inflation within the U.S. economy is too high, then the group is more likely to raise the fed funds target rate, so as to bring inflation under control. Conversely, if the FOMC determines that numerous sectors of the U.S. economy are flagging in a significant way, or if the economy is determined to be in recession, then the group is more likely to lower the fed funds target rate, so as to spur economic growth. If the U.S. economy is growing at a moderate pace and inflation is also rising at a moderate rate, then the FOMC is more likely to make no changes to the fed funds target rate.

When it comes to borrowing money, timing is very crucial, so it’s important for consumers and business owners to stay informed about what the FOMC is likely to do with the fed funds target rate at the FOMC’s next monetary policy meeting. If the U.S. economy is showing clear signs of contraction, then holding off on a fixed-rate loan may be a good idea, since in such an economic environment, short-term interest rates, like the Prime Rate, may be on their way down. On the other hand, if the U.S. economy is growing at a very strong pace and the rate of inflation is relatively high, then borrowing via a fixed-rate loan sooner rather than later may be the smarter option, because in such an economic environment, short-term interest rates may be on their way up.

Variable Interest Rates and HELOC

In most instances, your HELOC Equity credit facility will feature a variable interest rate. This is very much akin to how your credit cards operate. Typically, a specific number of points (as in interest rate percentages) is added to the prevailing prime interest rate. If you have an outstanding credit score then your HELOC may feature the prime borrowing rate, which is usually tied to movements in popular credit indexes such as US Treasury Bonds or LIBOR (or the London Interbank Offering Rate). As these indexes fluctuate, so does the amount of interest that is due on the outstanding principal balance that you have drawn from your HELOC.

 

However, in order to ensure that during times of inflation, most HELOC agreements feature maximum interest rates. The same generally holds true of variable interest rate mortgages. If the interest rates associated with your HELOC begins to rise rapidly as a function of major changes in the credit markets then it is advisable that you repay as much of the credit facility as you can. This will substantially lower your payments. As we have discussed before, one of the primary concerns among central banks throughout the world was that interest rates would rise sharply as a result of the credit crisis, lack of securitization market, and the downward spiral of housing prices. However, central bankers have poured money into the financial system so that the prime interest rates remain at historical lows.

 

On a side note, the reason why interest rates vary is because money

Debt Consolidation with a HELOC Equity Line

Although we have discussed how you can use a HELOC Equity facility to amplify the equity in your home, one of the other most common purposes of a home equity line of credit is to consolidate bills. This is often an excellent method of reducing your monthly debt service payments if you have a number of outstanding debts that carry high interest rates. Let’s take a look at an example. First, let’s assume that you racked up $75,000 in credit card debt (which is an unsecured debt) that carries an interest rate of 19% per year. If you have substantial equity in your home then you can receive a line equal to $75,000 with an interest rate of 6% (assuming that you have the appropriate collateral and credit scores in place). As such, you will reduce your monthly payments on your outstanding debts by more than 2/3. Additionally, chances are that consolidating your debts via a HELOC Equity line of credit will drastically increase your credit score.

 

Most credit scoring agencies look upon large balances on credit cards as a large negative. This is because the interest rates are higher, the risks relating to default are much higher, and it shows a general recklessness when it comes to your spending habits. Consumer loans (such as credit cards) are looked at differently than home loans or mortgage credit facilities (such as residential mortgages and HELOCs). As such, by reducing your consumer loan debt down to nothing

Truth About Second Mortgage and HELOC: Are They One and the Same?

A lot of people often confuse second mortgage with home equity loan. While both are associated with each other, they have their own benefits. But distinguishing one from the other should not be difficult. A second mortgage is a type of home equity loan. Equity refers to the difference between the current appraised value of your home and the amount you have paid towards the first mortgage. The amount you can borrow on a second mortgage is usually based on the difference between the current value of your home and the remaining principal balance on your first mortgage. The second mortgage is an effective means of tapping the asset value of your home so that you can meet your financial needs and avoid acquiring high interest unsecured debt like the one offered by credit cards.Generally, one can get a second loan wherein the total loan-to-value ratio of your first and second loans equals 85 percent of your homes appraised value. On the other hand, there are lenders in almost all states that allow you to take out a second mortgage that equals to 125 percent of the appraised value of your home. Second mortgages usually have a fixed interest rate that runs.  Also, it is usually a 15- to 30-year loan. As with the initial loan, the rate of interest and points for a second mortgage will be based on credit history, home price, and the current interest rate. The second mortgage may have a higher interest rate, but the fees are typically lower. Furthermore, second mortgages are also used to pay out a fixed sum of money to be repaid on an appointed schedule. People who are in an emergency situation usually opt for a second mortgage. This is because when you get approved for such mortgage, you will receive a lump sum, which you can use for expenses like roof repairs and home renovations. You may also use the money from your second mortgage for expenses not entirely related to house expenditures, like school tuition, car repair, vacations, debt consolidation and other financial needs. Home equity loan is different. This is used to refer to a home equity line of credit (HELOC). A HELOC is often revolving and is similar to a credit card, wherein the interest is charged, and the amount you are allowed to borrow is based on your creditworthiness. Like the second mortgage, a HELOC may be used for any type of expense, but anything that is paid back above the interest owed will be returned to the account and can be used again when needed. Usually, home equity line of credit loan has a term of up to 15 years. If you sell your home before you have repaid the line of credit completely, you will then have to do it upon completing the sale. This feature is applicable to both the HELOC and the second mortgage. In determining the limit of your HELOC, lenders examine your homes appraised value and start calculations at 75 percent of that value. They then deduct the remaining balance owed on your mortgage. Your current financial needs will help distinguish the type of loan that is appropriate for you. For one-time expenses, you can opt for a fixed-rate second mortgage. But if you have a frequent need for extra money, a HELOC would be right for you.

Using a HELOC for Educational Purposes

 

As we discussed in previous articles, you can use your HELOC for almost any purpose including for paying educational expenses for yourself or your children. This article will focus on the hypothetical scenario where a HELOC is used to pay for a child’s education. Foremost, the advantage to using a HELOC Equity credit facility versus taking out a student loan is the reduction in paperwork. Student loans, as they are often subsidized by the Federal Government, require tremendous amounts of paperwork. Additionally, if your child is obtaining the loan then the credit facility that they are using to pay for higher education will often appear on their personal credit report. As we have all heard, there are many difficult stories of 22 and 23 year old people graduating college with six figures worth of debt on their credit report at the time of their graduation. Using a HELOC Equity facility can quickly ameliorate this problem for your child if you intend to pay for their higher education.

 

Student loans are typically considered unsecured loans. However, the Federal government has enacted a number of programs to ensure that the interest rates of educational loans are much lower than any other type of personal loan that is unsecured. The interest rates tied to student loans are typically lower than that of a traditional home equity line of credit. However, again, the principal advantage is that the repayment time for using a HELOC versus a student loan is much longer. This will lead to a much lower month to month payment for you versus a student loan payment in most circumstances. Additionally, the federal government provides many incentives, tax deductions, and tax credits for parents that pay for their child’s education. In many instances you may be able to write off a significant portion of the actual tuition expense as well as the interest accrued on the home equity line of credit. As always, you should always check with your tax professional or CPA when determining what tax advantages or write offs may apply to you when using a HELOC Equity facility for educational purposes.

Things Not Advisable to do with your HELOC

Although the funds that are made available to you through your HELOC Equity credit facility can be used for any purpose, it is advisable that you do not use the credit line for luxury purchases, vacations, or new cars. Again, it is completely up to you how to use these funds. However, it is important to remember that you are extracting the equity out of your primary residence (which for most people serves as their principal life investment). The temptation to use a HELOC Equity line for luxury purposes is quite understandable. In regards to acquiring credit, a HELOC is one of the east financing vehicles that an individual can obtain. Again, this is because banks and mortgage companies like making loans against tangible collateral such as real estate (especially owner-occupied residences). For most people, acquiring a HELOC gives them more access to capital than they have ever had in one sitting.

 

If you have spent twenty years paying your mortgage then there is a substantial chance that you have built a massive amount of equity into your home. If you own a $300,000 and have $100,000 left on your mortgage then you have almost $200,000 of net value in your home. Given today’s loan-to-value rates, you could potentially receive a line of credit that equals $150,000 to $160,000 based on your equity. For most people, obtaining a HELOC Equity line feels like a windfall profit. However, it is not. It is a loan. Like with any debt instrument it should be used wisely. Many people would not quickly rack up $150,000 of credit card debt, but for some reason, studies have shown that they have a greater inclination to do so with a home equity line of credit. As such, when thinking about acquiring a HELOC Equity facility, it is imperative that you think of the ways that you intend to use the proceeds.

Using a HELOC Equity Line for Business

HELOCEquity.com is party of a family of websites that focus on varying aspects of lending, business loans, residential mortgages, and commercial mortgages. This particular portal, again, has been built to provide you with insightful information regarding home equity lines of credit. As our firm deals with a number of entrepreneurs that are seeking capital (especially debt funds), one of the most common questions asked is whether or not a HELOC can be used to start or finance a growing business. The answer is yes. In fact, many starting entrepreneurs find it extremely advantageous to use a HELOC Equity line in order to launch their business operations. This is because the paperwork involved with a home equity line of credit is substantially similar than that of a traditional business loan. In most instances, if you intend to use the funds from the HELOC for business purposes, you are not required to submit a formal business plan.

 

Additionally, the interest rates associated with HELOC Equity are much smaller than those associated with traditional business loans or lines of credit. This is because real estate lending is typically the least risky form of lending for a financial institution. Again, in the event of a default, the bank can simply foreclosure on your home, sell it, and recoup their lost debt investment.

 

In regards to taxes, you are typically able to write off the interest accrued on your HELOC Equity line. This is especially true if the funds have been used specifically for business startup or expansion purposes. However, before making any decisions in regards to interest costs related to your HELOC, you should speak with a properly qualified accountant who can assist you in making the determination of whether or not this deduction may apply to your business operations.

Steps for Obtaining a HELOC

There are a number of things that you must have and do prior to applying for and acquiring a HELOC Equity facility. First, you must be reasonable sure that you have equity in your home given the current state of the housing market. Second, you need to determine that amount of credit that you want to acquire. This does not necessarily mean that you need to extract as much equity as possible from your home. This is especially true if you know that you have a tendency to rack up debts or be somewhat irresponsible financially. Once you have made these two determinations, it is time to start the process of obtaining a HELOC Equity facility.

 

First, a formal appraisal will need to be completed on your home. A professional and licensed real estate appraiser will come to your home, get the vital statistics of the residence (age of home, improvements, etc.), and a comparison of what other homes in the area are selling for and have sold for over the past three to six months. Once this determination is complete, the appraiser will prepare a final report showcasing the estimated value of the property.

 

Now that you have your property appraisal in hand, it is time to determine the equity that you have in your home. This can be done simply by taking the appraisers report and subtracting the outstanding balance any mortgage or credit facility that you have tied to your house. The remaining number is your equity. As a rule of thumb, you can multiply your equity number by .75 to determine the approximate maximum amount you can borrow against your home equity.

 

The final step is to go to the bank, fill out the loan application, and wait for their decision. If they do decided to grant you credit then they will come back with a list of terms, interest rates, and other covenants regarding the HELOC Equity facility.

 

As we have discussed in a previous article, if your bank does not come back with favorable terms, you can always approach a mortgage brokerage to assist you in finding a better deal.

Why the Lowest Mortgage Rate is Not Always The Best Rate For You

Many times I am contacted by mortgage clients asking about what my best mortgage rate is.  It is common to believe that everything is an apples vs. Apples comparison with regards to mortgage rates, and that the lowest rate is always the best deal.  However, this is often not the case.Borrowers often overlook the terms of the mortgage, or do not receive disclosure of items that are not attractive to an offer (particularly from Canadian banks).  Below are some of the situations where taking the lowest rate will often cost you money in the long run:-Many times the bank will not even approve you for the amount you need to buy the home you want.  However, there are other “A” mortgage lenders out there who will approve you and also give excellent rates.-I have also had clients who were with a bank who required that the money was taken from an account at their institution, which is not where they banked, and they found it very inconvenient to have to transfer money every month.-Your mortgage lender may offer you a low rate to get into the door, and then when it comes time to renew your mortgage provide you an offer that is significantly higher than the market is offering.  At that time it may be difficult for you to get an approval elsewhere and you could be stuck with their offer.-If you get a variable mortgage with the intention to lock in to a fixed mortgage rate at a later date, many bank lenders will only give you posted rates when you lock in, meaning your interest rate will be much higher.-Do you want mortgage life insurance coverage to protect yourself in case of death or disability? Many lenders including all the banks offer coverage that is strictly tied to their institution, so if you become sick during that coverage and try to move your mortgage, they will discontinue coverage and you will be paying much higher premiums to be re-insured elsewhere.-Home Equity Line of Credit (HELOC) mortgages are often reported on the credit bureau, particularly with the banks and credit unions.  It is generally much more favourable to have a HELOC mortgage that is not reporting on your credit bureau, as it is more favourable for your credit score.  This could save you money and allow you to borrow money easier in the future.-Sometimes a lender has a product that works with a strategy that is of benefit to you but may not offer the very lowest rate to get those benefits.  An example of this would be the TDMP mortgages, which is a structure to make your mortgage tax deductible in Canada, and can help to create a great deal more wealth than a lower rate may offer.Save Money on your Mortgage, Not Just on Your Mortgage RateThese are just a few examples of things that could cost you much more money than saving .1% on your rate will give you.   Keep this in mind next time you meet with your banker about your mortgage and often it is best to seek a second opinion from a mortgage broker who can give you helpful advice.

HELOC and Mortgage Rates in This Economy

A HELOC is a home equity line of credit. This is one way some people use to borrow money for large purchases such as their children’s college education or a large purchase that they would not otherwise use their credit card to purchase. Because this is a variable interest rate loan it will have some tie in with current mortgage rates.
It works like this. You apply for the home equity line of credit. Many things are taken into consideration like your credit score. But of course as the name implies the most important factor is how much equity you have in your home. Equity is the difference between what you owe on the property to the lender holding the note on the property and what the property is worth on the open market.
This is the amount you will apply for with a home equity loan. The collateral of course is your property. Keep in mind of the mortgage rates – if you fail to make the payments then the land will be foreclosed on. The first lender will get paid first and then the people who hold the note on the home equity loan.
Of course no one goes into such a loan expecting that to happen. But the long and the short of it is that people who are facing foreclosure because they defaulted on their home equity loan never planned to be in that position. The home equity loan works like a line of credit. You can borrow the agreed amount based on the equity in your home. You take this out as you need it and then you pay an interest rate on the amount you have taken out.
The interest rate you pay will be based on the prime market value at the time. This rate may be different than the current GIC rates, but it will be a variable interest rate. So you are taking a risk that the interest rates will stay low but they might shoot up also. One advantage this type of loan has over the basic credit card is that you can write off the interest on your income tax.
This is one reason some find it to their advantage to take out this type of loan verses using their credit cards. Some might be surprised to know that there was a time when people could deduct interest paid on credit cards from their income tax liability.
So if you are looking at a home equity line of credit you need to make sure you have a secure job. You definitely want to have at least six months of income liquid to pay your bills in case you lose your job or some other emergency occurs. You want to make sure you are counting the costs of such a loan. You will want to make sure the reason you are taking the loan is important enough to cover all the planning you will have to do.
And you have to be prepared for the worst. No one plans to go into foreclosure and lose their home. But remember when you take out any loan with your home as collateral you always have to be prepared for the worst case scenario.

Mortgage Rates

HELOC and Mortgage Rates in This EconomyFixed Rate Home Equity Loans, For Bad Credit »Mortgage Rates Q&A

More Mortgage Rates questions please visit : QEOK.com

Why 15-year, fixed-rate mortgage when you can run for 30-year, fixed-rate ?Pay more years later if you want to shorten or payoff the mortgage. I saved $126,000.00 by refinancing from a 30yr to 15 year. Well worth the extra $200.00 a month I pay The judgment to go 15 years is…Why an adjustable mortgage does not adjust downwards after a rate is reduced?The rates on mortages can purloin time to adjust downwards. Some rates are tied to benchmarks that are evaluated as little as twice a year, like January and July, so the rate is set depending on what the rate is…Why an adjustable rate mortgage?why would someone want to pay 800 a month for 3 years then 1200 a month after 3 years? it sounds nuts! whats the dominance of doing that? so they can live in a bigger house right now. Also they might not want to live here long…Why are 30 year fixed mortgage rates going up when the Fed announced a partly percentage cut surrounded by interest rates? Because the Fed. cut the Federal Funds rate and the Discount Rate which do not affect the 30 year morgage rates. They affect the rates at which bank borrow money from the…Why are 30 year fixed mortgage rates increasing so much over former times month?This is puzzling to me considering the economy and people’s need to refinance. You would cogitate that the rates would drop or remain lower in order to instil more buyers to enter the marketplace. So, why have average…Why are 30 year fixed mortgages one penalize next to difficult rates than ARMS?Isnt low rate ARMS partially why we are in this Mortage Crisis to fire up with, yet mortgage lenders are raise the rates on 30 year fixed and once again having low rates for ARMS. I have great credit…Why are APR’s difficult contained by Arms than fixed rate mortgages? Fixed rate are set for a determinable amount of time whereas ARMs are reviewable and adjustable up or down at the bank discretion and it bases this on the cost of money and the Federal Reserve loan rate . that’s odd ……Why are bank within my nouns not offering low interest loans/mortgages if the federal interest rate is 2-3%?That’s the rate the feds charge the bank to borrow money – then they do have to charge extra to money their operating expenses. Right now, until the government programs return with moving,…Why are fixed mortgage rates and adjustable rates different?I just saw that a 30 year fixed mortgage is 6.07% and a 5/1 ARM is 5.91%. What are the reasons why these rates differ by nearly .2%? Because ARM’s attract folks with bad credit by confusing them near this seemingly lower rate. In…Why are Mortgage Default Rates Higher within Heavily Hispanic States instead of IA, WY, SD?The highest default RATES (not out-and-out numbers) are in CA, FL, NV, AZ. Because more associates in those states were unaware enough to take out mortgages that they couldn’t afford. If enjoy no sympathy for people who…Why are mortgage lenders adjectives rates?I’ve noticed that a number of mortgage lenders own cut their rates a number of times this week – Nationwide, Halifax, Bradford & Bingley and RBS. What’s the reason trailing this and will it help in the current crisis? Rates progress up. Rates go down….Why are mortgage loan interest rates highly developed for fixed rate mortgages held for longer period of time?I am sorry if this sounds like a dumb question, but I don’t take in. For example, why are 30 year fixed mortgage rates the highest mortgage rates, vs say a 15, and why are 15…Why are mortgage rates going final up? one reason is stock market is going up. Investors are not inclined to invest in low yield bonds if equities are performing all right. so borrowers have to pay high interest rates on bonds to attract investors. Mortgage rates tend to move in…Why do lenders charge one and the same interest rates for mortgages? Are they required by ruling? Lenders don’t charge the same…We are allowed to charge just something like whatever we want. That is how brokers stay in business, they come to empire like me (Mortgage Banker) and borrow money, they then…Why do MORTGAGE Interest Rates progress up Every time the Fed cuts rates?Why is it that every time the fed cuts, rates for home loans go up? The rates the banks get hold of (“fed” rate) is what the money costs the banks, then into it adjectives their costs/losses (cost of funds) and…Why do mortgage interest rates progress up?Recently in the uk there enjoy been 2 notable rises surrounded by mortgage rates which has resulted in thousands have their homes repossessed…what or who makes the rates rise? The Bank orf England have increased intrest rates & mortgage rates follow these increases. Its a way…Why do MORTGAGE Interest Rates travel up EVERY time the Fed cuts rates?I’ve been watching for a while. In January rates were 5.125%, consequently that day the fed cut and rates go up to 5.5%, in a few minutes. It happens every time the feed cuts rates.it seems if they just…Why do mortgage lenders proposal better rate to independent broker compared to what they submission on the giant street Hello, when a client goes tro see an Independent Mortgage Broker, the broker will first of all do a factfind to find out as much as they can roughly speaking the client. they…Why do Mortgage Lending Companies own a giant turnover rate for organization?I’d also like to know why the companies take so much out within taxes from employees on what they sold. Thank you. Everyone knows what he gets into beforehand signing his work contract. Mortgage companies are a feast or famine business….Why do mortgage rates be in motion UP when Feds cut rates?When the Feds cut rates, short term debt like credit cards and HELOCs budge down. But why do mortgage rates increase? The Federal reserve can only vary the interest rate at which they loan money to other bank as well as…

Home Equity Line of Credit Loan- HELOC

If you’re considering a home equity line of credit, you’ll find that they are very useful loans. It is the kind of loan you can take by using your home as collateral or security. It is a very reliable and inexpensive way of borrowing. These loans are offered in different ways and in different amounts by a variety of lenders, according to the interests of the consumers.
The wise consumer should check out various lenders before choosing one. Remember to compare the plans and policies of different lenders before the deal is settled. Choose the one you find to be most reliable and inexpensive. Different lenders offer different interest rates. Some offer very low introductory rates while other offer very big upfront payments. Some have closing costs or continuing costs. You may also find the need to make a hefty payment at the end of some loans. All these conditions have to be compared and evaluated wisely first. The discretion of the consumer in choosing a loan is very important in avoiding inconvenience in the future.
The popularity of the home equity loan is increasing with each passing day because of their lucrative offers and flexibility. The lenders offer large amounts of money to the consumers in a relatively low interest that is not available in any other form of loan.
A consumer can borrow up to 85 percent of a home’s appraised value through a home equity line of credit, depending upon your income, credit rating and debt. Once you have signed and the loan is approved, you will be able to take your payments by using checks, credit cards or both. Be sure to review all rules and conditions.
The home equity line of credit is set to a particular fixed time-period. You can withdraw money from your account during this particular period. Most of the lenders allow you to renew your credit line if the draw period is over. Those lenders who don’t allow renewing may want the consumers to pay the full outstanding balance or pay the balance over a fixed time.
Home equity lines are very secured types of loans. The Federal Truth in Lending Act safeguards the consumer by setting many rules and conditions that all the lenders need to abide. All the lenders must disclose the terms and conditions to the consumers. They must disclose their annual percentage rate, payment terms, use of accounts, variable rate features and the general features of the plans. If any change has taken place which you don’t like, other than the variable rate features, then all the money you have paid before will be returned to you. You may cancel the transaction of the loan if you think you are at risk after three days of assuming the loan. All the money you have paid will be returned to you when you cancel your transaction.
Interest rate is the most important thing every consumer should consider when he chooses the home equity line of credit. You need to compare the interest rate different lenders offer to the consumers before you sign with any particular lender. There are various things you need to check out like the annual percentage rate, which is the cost of credit for the yearly basis. You may need to compare points and closing costs that may add to the cost of the home equity loan. Some lenders offer very low interest rates at the beginning and then gradually increase the rate which, which you may find very difficult. You may put your home at risk if you are late or can’t pay the payments in time.
Apart from the home equity line of credit, a home equity loan is also very popular because of its low interest rate and tax deductibility. This is also a type of loan you can get by using your home as collateral. It is the difference between your home’s value and your outstanding mortgage balance.

What Do Online Equity Lenders Look at Before They Determine your Loan Rate?

Various factors are what build up your home equity loan rate. Banks, Financial Institutions and lenders pay more attention to how much you are looking to liquefy and whether or not you will be able to pay the loan back. These are only some of the main factors that determine your future rate. However, there are some solutions you can apply even if you don’t have much equity available for cash-out or are considered as a bad credit labeled consumer.

Do you have the Time to Improve Credit Ratings?

If you have a low credit score you may want to improve your credit ratings before applying for the HELOC or Home Equity Loan. Bad credit ratings have a substantial negative impact on the rates you are quoted. If you do not need the money cashed out, for consolidating debts or you can wait a few months, repair your credit and then apply for the loan.

Lowering the Rate after Applying For a Home Equity Loan

The loan fees you are quoted depend also on the closing costs and repayment period. By shortening the repayment term you are bound to find lower interest rates. Comparing different lenders will help save money and negotiating closing costs has become a very useful way to reduce fees among consumers world wide. Refinancing your current mortgage through the same lender may also help reduce the rate.

Do Proper Research before Signing the Home Equity Loan Agreement

Make sure to compare options and total loan costs from different lenders. Don’t fall victim to scams! If a lender asks you to sign a blank document or pushes you to cash-out more money than you require don’t hesitate to refuse. Make sure you do proper due diligence by comparing fixed rates Vs variable rates with different terms from various lenders for the most secure and cost efficient loan offer. Compare home equity lenders and online lending to avoid scams.

Fixed Rate Home Equity Loans, For Bad Credit

As the owner of your own home, you have a very important resource available to help you weather many financial storms including the current global credit crisis. With the credit crunch in the news on a daily basis, it is a good time to take a look at the flood of equity in your biggest asset – your home. A home equity loan or home equity line of credit (HELOC) is a loan that is granted in principle, with the value of your house as collateral. The amount of the loan depends on the difference between your current mortgage value and the current value of your home. A fixed rate home equity loan is a good way to liberate extra cash you for a variety of purposes, including debt consolidation, use of wealth creation through good solid investment of capital, education, home improvement, etc. But before you decide on a fixed rate home equity loan or a variable rate home equity loan their best to compare the advantages and disadvantages of each type that you can make the right decision for you. Using your home equity loans as one of the greatest long-term financial decisions that will make you its best to get the decision right from the start. Getting it wrong could literally cost thousands. The question is whether to consider fixed-rate home equity loan or a variable rate home equity loans. Fixed rate home equity loans A fixed rate home equity loan is a loan where the interest is fixed and thus the repayment of a certain interest rate for a certain time. The period varies but can be anything from two to five years to increase the length of the loan. The professionals at a fixed rate home equity loan are:

Is Applying for a Home Equity Loan Based Only on the Interest Rate, the Right Thing to Do?

Home equity loans are a great source for cash when in need to cover unexpected payments such as: medical bills or for home improvements. These days the rates offered by many mortgage lenders happen to be very competitive and consumer attracting. When deciding on working with a specific lender, make sure that the rates are not the only thing that concerns you.

Looking Beyond the Rates Offered by Equity Lenders

Although the interest rates offered, play a significant role when obtaining a HELOC or home equity loan, they aren’t the only important factor to look at. The terms, fees and any additional payments such as down payments can have a tremendous impact on the total cost of the loan. Therefore when doing your due diligence, make sure to review these important details and find out if the spoken of lender is opened for negotiation.

Comparing Offers, Rates and Terms for Your Home Equity Loan

It is well known that comparing offers from different financial institutions and online lenders will help you find the best deal available for your situation. Lending Companies are in heavy competition and you should take advantage of it. Sub-Prime lenders will even quote decent rates to consumers that can prove that they can keep up with repayments, just to make an additional sale.

Experts recommend comparing rates to understand the market better. Doing so, you will avoid making mistakes and not find yourself scammed. Naturally, you will also find the best rate for your individual situation and by comparing the terms and additional payments you will obtain the best home equity loan or line of credit. Visit Equity Lending Info: Online Equity Lenders for more details.

Projected California Unemployment Rate for 2010 through 2020

You’re probably wondering when and how fast the economy is likely to recover for a lot of strategic planning reasons like: when are sales likely to increase, or when should I hire more employees. Every business is different, but overall you should see the following occur within a reasonable margin for error. These figures were created from historical unemployment data from 1976 to Dec. 2009. These projections are purely economic-based.

From Jan 2010 to the first quarter of 2012 unemployment is projected to drop from 10% to approximately 7.2%. This projection is based on the high in California unemployment rate of about 10.8% in 1983 that decreased to 7.2% in 1985 and the high in California unemployment rate of about 9.9% in 1993 that decreased to 7.8% in 1995. 

From about the first quarter of 2012 to the first quarter of 2013 unemployment is projected to hold at 7.2%. This projection is based on the technical indicators of California Unemployment of about 7.2% to 6.8% in 1980 through 1981, 1985 through 1986, and 2002 through 2004. It also includes indicators in California Unemployment of 7.8% in 1991 and 1995 through 1996.

From about the first quarter of 2013 to the first quarter of 2016 California Unemployment is projected to drop from 7.2% to about 5%. This projection is based on the technical indicators from 1985 though 1988, 1996 though 1999 and 2004 through 2006.

From about the first quarter of 2016 to the fourth quarter of 2016 California Unemployment is projected to hold at about 5%. This projection is based on the technical indicators from 1988 through 1990, 1999 through 2001 and 2006 through 2007.

From about the fourth quarter of 2016 to the first quarter of 2019 California Unemployment is projected to increase from about 5% to 6.8%. This projection is based on the technical indicators of California Unemployment of about 7.2% to 6.8% in 1980 through 1981, 1985 through 1986, and 2002 through 2004. It also includes indicators in California Unemployment of 7.8% in 1991 and 1995 through 1996.

From about the first quarter of 2019 to the first quarter of 2021 California Unemployment is projected to hold at about 6.8%. This projection is based on the technical indicators of California Unemployment of about 6.8% from 2002 and 2004, and it is supported by indicators in 1980 through 1981, 1985 through 1986, and 2002 through 2004.

Although it is inconclusive whether California Unemployment will increase after the first quarter of of 2021, the period of time between recessions is increasing. This is an overall good sign that’s shows the financial management of California and the nation as a whole is slowly improving over time. In addition, the recession in 1983 had a high California Unemployment rate of 11% and the recession of 1993 had a high California Unemployment rate of 9.9%. Ten years later we had a mini-recession with a high California Unemployment rate of 6.9%. If you exclude the most recent recession, you would see that the nation was thriving and the impact of recessions was decreasing, then in 2007 things started to change.

International Factors:

Jobs, raw materials like iron and petroleum, and FDI started to shift to China. Although many investors are optimistic about earning 15% in China, while the US and Europe are recovering from a recession. These new markets will not sustain double digit growth indefinitely due to wage increases in China. The biggest problem is that China holds it’s own currency to inflate the value of its dollar relative to other currencies, then the Chinese government makes large purchases of iron and petroleum at a huge discount. Recently, they were caught trying to own a controlling interest in several US petroleum companies. Under normal circumstances you would think China is a growing country, and that’s why they are buying up a majority of the world’s iron and petroleum. However, we’ve known for years now that they are stockpiling more than 80% of their iron and petroleum. Why? Aren’t bullets and military equipment made out of iron? Don’t they need petroleum to fuel their aircraft and tanks? Although the rewards from investing in China may be initially attractive, the risk of losing all of your investment as a result of political action or war may not be worth the risk.

Domestic Factors:

Real estate values in the US from 2004 to 2008 were overinflated by over-optimistic home appraisals. This resulted in excessive spending and debt from refinancing, HELOCs and home sales. Once creditors decided to slow down the excessive spending, people lost their jobs. Mortgage rates have been very low the whole time, so the problem is not Adjustable Rate Mortgages. It’s people out of work. This could easily be prevented in the future by best practices that place a cap on average nationwide real estate growth. Appraisers that go over the average rate set in their area, should be investigated and possibly lose their license.   

Home Equity Cashout Loan Rates

A Home Equity Line of Credit is same as a credit card. You can have a loan of money up to your credit limit, and you get charged interest on the portion that you borrow. You can pay down the balance, and then reuse the credit. You may also choose to refinance the Equity Line and get another 5 to 10 years to use the line of credit. However, Cash out Refinance is paying off the existing credit and acquiring a new loan.

The difference between the pay off balance and the new loan goes back to you as cash. Example, if the existing pay off balance is Rs.100, 000 and the new loan is Rs.120, 000, then Rs.20, 000 less closing cost goes to you as cash. Since rates on Home Equity Line of Credit are usually higher than the regular credit rates, one might as well consider refinancing the whole credit and pay off the first even though the loan amount of HELOC (2nd loan) is usually much smaller than the first credit.

A home equity loan is another way to get to the cash in your equity that you want. A home equity loan is a second credit. While it obviously does not require you to refinance your first credit, it will give you a new monthly payment – and the cash you want. As a second credit, there will also be closing costs and other fees – with the possible exception of going through your present lender.

Suppose when you need the cash out of the equity of your home you may surprise that which one is better for you – cash out credit or a home equity loan. The truth is that both have their advantages – but probably one will be better for your situation than the other. This will mean that you need to know a little about each in order to make up your mind. Here are some differences between the two.

A cash out credit will involve refinancing your first credit This could be a good way to go, particularly if you can get interest rates on the refinance that are at least one percent (two percent is to be preferred) lower than your present credit rates. So not only could you get the equity you want, but also you will save thousands of dollars by getting better interest rates, too.

Before you agree to either a home equity loan or cash out credit, you will want to store around to find the best contract. It will take some time to do it right – but you are the one who will benefit from the savings. Check the various features, such as the interest rate, the fees, and the terms of repayment – including the monthly payments.

Belonging to the Sub-prime Market and Obtaining Fair Home Equity Loan Interest Rates

Poor credit rated consumers find them confused before applying for a home equity loan. The local Bank they work with will not agree to lend the money because they think that the borrower won’t be able to pay back the loan and therefore, in risk. It isn’t an awkward fact that banks or financial institutions feel this way. Online Equity Lenders however, are willing to take the risk if the borrower can comply with certain conditions.

What do Sub-prime Equity Lenders Really Care About?

Every sub-prime lender is worried when lending money to a person with bad credit. Do to this fact they quote higher interest rates to people applying for a home equity loan with bad credit. Lenders are willing to take the risk involved with lending money to a bad credit consumer under the condition that the borrower can pay back the loan without any problems. One way they try to control this is by verifying that the consumer has a job.

There are Ways to Obtain Decent Home Equity Interest Loans

The Lowest Home Equity Loan Rates are offered to people with high credit scores. Knowing this, you may want to repair your credit before applying for the loan. If you are looking to consolidate debts, you may not have the time to improve credit ratings, but you may still get a lower rate by negotiating and applying for short repayment terms.

A short home equity loan payment term means lower interest rates, but, higher monthly payments. All these factors should be taken into consideration before applying for the loan, especially if thinking about using the cashed out money to consolidate debt. You want to make sure your budget allows you to pay higher monthly loan payments, if you don’t want to find your house being repossessed one morning! If you have bad credit ratings a bad credit home equity loan may be suitable.

Best Home Improvement Loan Rates

When you own a home, you think of how you can maintain it. This is, after all, an investment you make. It is only smart and practical that you do whatever it takes to maintain it.

That is why there are home improvement loans that you can make the most out of. But how do you know which one is the best. There are so many opportunities there that all end up claiming to be the best home improvement loan.

However, once the whole hoopla faded and you’ve already signed on board, you realized that it was not what you expected it to be. So you have to regain whatever you’ve lost. This is a challenge for you indeed. You don’t need to be overwhelmed.

Just take the time to compare one home improvement loan with the other in order for you to know which one you should get into. The first thing you should know is the type of home improvement loan available. In order for you to get the best home improvement loan, you need to know the kinds out there.

You have to determine which one works for you and whether it is appropriate for your lifestyle or not. Then the next question is whether you can afford to pay for it in the long run.

Know that if you let the bills mount high, you will have a higher mortgage rate and the home improvement loan that you originally intended to take advantage of might result to foreclosure if you can’t pay for your home all in all. We suggest that you look into the funding factors. The best home improvement loan knows that the large purchase is very essential.

This is why when you’re contacting lenders, you need to be aware of the current home equity loan and whether this is the best one for your budget within your state.

The rates of the home improvement loan also vary by state. Check with HELOC if ever there is a way to make the rate flexible and be right for your budget and your preference. Finally always think of your credit. You need to have good credit before and after you opt for the best home improvement loan that you’ve decided to sign up for. In that case, you are able to keep a clean name and this will help in the future.

If otherwise, you will have a harder time applying for other loans. It is always smart to be reputable whenever it comes to any kind of bank transactions.

How to Shop for a Home Equity Line of Credit (heloc)

Shopping for a home equity line of credit (HELOC) is a relatively simple process compared to shopping for a mortgage mainly because with a HELOC the most important features you need to look for are the same from one lender to another. Still, HELOC has some specific characteristics you need to be familiar with in order to shop successfully.

Here are some of the most important features of home equity lines of credit you should understand and examine when shopping for a HELOC.Risk exposure:

Before you decide to apply for a home equity line of credit you should be well aware of the risks involved and particularly the higher exposure to interest rate risk. HELOC is an adjustable rate line of credit, rather than a loan for a specified amount, and its interest rate adjusts every time there is a change in the prime rate, on the first day of the month following the change. This characteristic makes HELOCs riskier in case of interest rate increasing than the standard ARMs which have longer periods for adjustment.Interest rate charges and margins:

Generally, all HELOCs are tied to the prime rate, as stated in the Wall Street Journal. This considerably facilitates their shopping in contrast to adjustable rate mortgages, for example, which can be tied to different indexes and require more researching.

However, HELOCs typically charge variable rather than fixed interest rates. In order to obtain the interest rate the borrower will be charged, a certain amount, known as margin, is added to the prime rate. Borrowers, shopping for HELOC, should always find out what the margin is because it varies among different lenders.

Lenders of home equity lines would typically offer a temporarily discounted, low interest rate lasting for a relatively short introductory period (for example 6 months). After the introductory period ends the rate is based on the prime rate plus the margin.Minimum draw limits:

One of the things the borrower needs to look for when applying for a home equity line of credit is whether there are a minimum draw limits, or a minimum average loan balance. Some plans have limitations on how you use the HELOC and may require a minimum draw amount each time you borrow money and the keeping of a minimum amount outstanding. HELOC costs and fees:

Many of the up-front costs and fees of setting up a home equity line of credit are of the same type as on regular mortgages. Such charges include a property appraisal fee, an application fee, and points (though HELOC lenders seldom charge points). In addition to those, HELOC shoppers would have to pay an annual fee (which is often waived the first year) and a cancellation fee (which is often waived after 3 years).

If you are shopping for a home equity line of credit you should examine and evaluate each of the above features to ensure that the terms of the HELOC plan you choose corresponds to your borrowing needs. Always have in mind that failure to repay the lines of credit may cost you the loss of your home.

Choosing Heloc Over Equity Loans

One thing about owning property is that it helps in getting loans. One can easily obtain secured loans by using the house as collateral. Moreover, secured loans are a lot more affordable than the unsecured variety. Those who have no mortgages to pay should take a look at the secured loans. Those who are still paying off the mortgage installments can make use of the equity on their home to make use of the various other available options. More importantly, these days, there are far more options than just home equity loans. There are other lines of credit that one can go in for.

HELOC or Home Equity Line of Credit is among the various new options being used instead of the home equity loan. In the case of HELOC, the bank provides a number of equity checks that can be issued as and when to take a loan depending on one’s equity balance. These equity checks, typically allow us to draw on a specified equity amount. The great thing about HELOC is that we are not required to draw out a single large amount. The checks give us the freedom to draw only the required amounts at the time.

This also means that the interest amount that we pay every month varies depending on the amount of loan taken. Moreover, the rates of interest for home equity lines of credit are variable. They are affected by market fluctuations. Thus, you might find yourself paying a higher interest rate one month, and a considerably lower one in the next. However, while making your final choice, make sure that you go with the one that charges a lower APR overall. Also, make sure that you are aware what the cap is on the interest that will have to be paid by you. This rate cap is different across states and lenders.

Thus, a HELOC is very different from the traditional home equity loan. Whereas HELOC allows one to advance oneself varying loan amounts over a period of time, a home equity loan amount is obtained at a single time. Just as HELOC has variable rates, a home equity loan has always had fixed rates of interest. This rate will not be subject to ups and downs depending on market conditions. As far as repayment terms are concerned, a home equity loan involves fixed monthly payments that are made throughout a certain number of months. In HELOC, repayment is much more adjustable. Overall, the two are very different, and which one you choose would depend on your own particular needs.

What Are The Advantages Of A Home Equity Line Of Credit (HELOC)

Getting a home equity line of credit is a great way to get access to the equity in your home. In fact, it may be the best way to use that equity – unless you know you have need of all of the money that is available. Here are some of the advantages that you can have with a home equity line of credit mortgage.
First Advantage – Get The Money As You Need It
With any other kind of loan, you will get a lump sum. Your interest rates and payments are set. There are no options. With a HELOC, however, you are given a line of credit and a credit card or checking account that gives you access to the funds. You do not have to use all of it, if you don’t want to. This is especially good if you know that you need some money, but really are not sure just how much.
This kind of flexibility is great, because you are given a draw period in which you can get more money when you need it. This draw period can be up to 11 years. The truth is, who knows what kind of funds you may need in the next 11 years, or so? This gives you access to sufficient money as you need it and for projects – as they come up.
Second Advantage – Pay Interest Only On Money Used
A home equity line of credit only charges you interest on the money that is drawn out of the account. You are not being charged for money that is sitting idle – as it might with other types of loans. With those loans, you are paying interest on the full amount – whether you are using the money or not.
Third Advantage – Lower Interest Rate
The interest on a home equity loan is usually lower than other types of second mortgages. Usually it is just about two percent above the prime rate.
Fourth Advantage – Possibly No Closing Costs
Most HELOC’s have no closing costs! This certainly makes it the loan of choice, and it can save you a lot of money by not having these charges added to the loan. Some lenders will charge you closing costs, so this should be a good incentive to find one that does not. It will result in considerable savings at closing time.
Fifth Advantage – Tax Deductible
The interest that you are charged each year in a HELOC is tax deductible. Ultimately, this brings the actual interest rate down lower and means an even greater savings.
Some lenders may even use a home equity line of credit on top of an 80% first mortgage in order to eliminate the Private Mortgage Insurance. The way it is done is to get the first mortgage, pay your downpayment, and then get the HELOC for the balance. Make sure you also have enough for the closing costs at settlement, too.
A home equity line of credit can come with a number of other fees and charges. Some will charge a monthly fee or an annual one (or both), and others may charge you if you let the money sit too long without using it. These charges can be avoided if you shop around for the best deal. A HELOC is an adjustable rate loan with few caps (if any) in place. Some of these will come with guarantees of convertibility to a fixed rate loan if the interest rates get too high. Also, be sure to look for any penalties that you may incur if you pay the loan off early.

What Is Home Equity Line Of Credit (HELOC)

Owning a house is the greatest American dream. Additionally, having a house to save you from monetary needs adds up to the benefits of owning the greatest American dream.
You have tightened your belt during the time you are saving for your house. Now, that you have enough equity in that property, you may loosen up a bit by making use of your equity through home equity line of credit.
Home equity line of credit or HELOC, can help you in myriad of financial necessities. It can help you have a fund when you need it and for whatever purpose you may need it.
Although, you should be careful because putting your house as collateral may cause you to loose your house if you fail to pay your debt. This should make you think many times before you embark on taking money through home equity line of credit.
However, if your purpose of taking out money by means of home equity line of credit is to pay for medical bills or children’s college education, these expenses are inevitable. Thus, taking out money by means of home equity line of credit can be your best bet.
Additionally, if you want to consolidate your debt, HELOC or home equity line of credit may also be beneficial. This is because compared to credit cards and other unsecured credit facilities, the interest rate in a home equity line of credit is somewhat smaller. Another benefit of this means of taking out money is that consumer credits interests are tax deductible.
However, having said the benefits you may have from acquiring a credit through home equity line of credit, you may also need to look at the possible consequences if you fail to pay your debt.
The most important consideration is the possibility of loosing your house to pay off the debt.
It is thus recommendable that while you are considering the flexibility of a credit line, if you need a lump sum fund, you may consider taking out a Home Equity Loan instead. This is because in a home equity loan, you pay the interest and part of the principal debt regularly.
This is in contrast to the variable interest rate that applies in a home equity line of credit. Additionally, in a home equity credit line, your payments balloons at the end when you need to pay the principal amount of debt.
The flexibility of the home equity line of credit extends up to paying only the interests and paying the entire principal loan at the end of the term.
This makes it quite hard, and if you are not ready for such balloon payment, the risk of loosing your house is intrinsic in this case.
This is the reason why financial experts recommend that before you sign any contract that puts your house as collateral, you may need to scrutinize yourself a bit.
-Will you need the money lump sum?
Ask about home equity loan.
-Do you need fund periodically?
Ask about home equity line of credit.
Consider also asking for payments terms, interest rates and what conditions will make the lender consider you in default. These questions once answered may help you realize if putting your house as collateral is the best solution to your monetary needs.
There are other credit facilities, for this reason, you may need to do your research first before deciding.
Various debt management websites can help you understand the eccentricities of financial management that will help you avoid loosing your most precious asset.

Secured Home Equity Loans ? Get your Loans at Low Interest Rates

Secured home equity loans are amounts given to you by pledging your house as collateral. These loans are given to you with low interest rates. These secured home loans are also provided to bad credit holders with defaults in payment, county court judgments and arrears

Understanding equity

The term equity defines the amount obtained by subtracting your mortgage balance amount from the market value of your home. The higher the equity the higher the amount you can opt for. You can borrow money up to 125% of the property.

Secured home equity loans: types

Secured home equity loans are guised n two forms, they are home equity loan and home equity line of credit. In home equity loans you will be given the whole loan in a lump sum amount and you are required to repay the amount in the form of installments at a fixed rate. In home equity line of credit, often called as HELOC, you can use the loan as if you are using a credit card where you can pay interest only on the amount you borrow. There is a limit under which you can borrow money under HELOC. The amount given by these secured home equity loans ranges up to

Fixed Rate Home Equity Loan

As the owner of your own home, you have a very important resource available to help you weather many financial storms including the current global credit crunch. With the credit crunch in the news on a daily basis, it’s a good time to take a look at the equity tide up in your biggest asset – your home. A home equity loan or home equity line of credit (HELOC) is a loan, which is basically granted using your house’s value as collateral. The size of the loan will depend on the difference between your current mortgage value and the current value of your home.

A is a great way of freeing extra cash which you can use for a variety of purposes including debt consolidation, wealth creation through good sound investment of capital, education, home improvement etc.

But before you decide on a or on a variable rate home equity loan its best to compare the pro’s and cons of each type so that you can make the right decision for you.

With your home equity loan being one of the biggest long term financial decisions you’ll make, its best to get the decision right from the very beginning. Getting it wrong could literally cost you thousands.

The question is whether to consider or a variable rate home equity loan.



A is a loan where the interest and thus the repayment are fixed at a certain interest rate for a certain period. The period varies but can be anything from two to five years to the length of the loan. The pros of a are:

Cons of a include:

A can help to cap your payments and they make it easier to budget. The best time to take advantage of a is when the rates dip a little. You can then refinance your home equity loan with and take advantage of the fact that rates will climb.

Variable Rate home equity loan

As opposed to , the interest on a variable rate home equity loan changes all the time. This means that when interest rates climb, so does your home equity loan repayment.

The pros of this type of home equity loan is that if rates fall, so does your repayments, but unlike , it is very difficult to budget for payments which fluctuate. This type does however allow you to take advantage of changing market conditions.

If the current rates are high, then its best to go for a variable interest rate loan and then once the rates fall, to try to change it to .

For more information please visit http://www.low-rate-payday-equity-home-loans.com for more information

Financing via a HELOC is better than revolving account

Right now if we have to decided to invest a huge resource, there is a vast opportunities available at the moment in the real estate business. For that we should be clear about our financing places before we put our leg into it. Now there is a good time to invest our resources, as there are so many foreclosures, and pre-foreclosures, bank owned properties out there. Basically it is apparent that people are not able to afford the homes and lands they originally purchased and are losing them right and left. If you are funding in right place, right now it is the time to invest and there are so many ways to go about when looking to secure a deal.Most of the investors have been currently establishing their investing through revolving accounts. There are two ways either a bank or a credit card, revolving accounts has increasingly become more substantial in the buyers market. A revolving account is one of the type debt associated account where the current balance that is outstanding does not have to be paid fully. it is paid only in installments and usually on a monthly basis. The borrower is needed to make a payment that is always dependant on the current balance on their accounts.These payments are usually calculated with minimum interest rates and also calculated without property reduction included. The customer is just like a borrower who has accepted the account and also all the conditions associated with it. The billing cycle interval is calculated between each billing cycle and when each payment is due. To assisting individuals dealing with debt consolidation, financing through a HELOC is also very useful to real estate investors, particularly those who purchasing real estate owned properties and properties in foreclosure.

Home Equity Loans Canada- Your Questions Answered

In a November, 2007 report, the Canadian Association of Accredited Mortgage Professionals (CAAMP) stated that in the previous 12 months, 17% of mortgage holders took out home equity loans or increased their mortgage. The average equity loan was $35,400.
What are people doing with all this money? Paying down debts, sending the kids to school, investing in their homes – there are many possible answers to that question. If you’ve ever considered tapping into your home’s equity, the following FAQs can help you decide whether home equity loans are the right strategy for you.What Are Home Equity Loans?
Home equity is the difference between the market value of your home and what you still owe on the mortgage. So if your house is valued at $300,000 and you still have $260,000 outstanding on your mortgage, your equity would be $40,000.
Home equity loans enable you to borrow against that equity. These loans are also known as second mortgages because they are a second loan (the primary mortgage being the first) that uses your house as collateral.How Much Can You Borrow?
With most home equity loans you can borrow anywhere up to 85% of the amount of your home equity. For the case above, with $40,000 in equity, the homeowner could borrow $34,000.
Some lenders have more generous options, even offering to lend 100% of the amount of equity in your home.How is a Home Equity Line of Credit Different?
A home equity line of credit (HELOC) is much the same as a standard line of credit, but it uses your home’s equity for security. With a HELOC you can typically borrow up to 90% of your home’s equity. With $40,000 in equity, you could obtain a HELOC for $36,000.
With a HELOC, you do not necessarily have to use all of the credit at once. You can use it as needed and pay back what you borrow, just like a standard line of credit.
On the other hand, home equity loans are one-time, lump sum loan. If you need more money, you’ll need another loan.
The general guideline is that a HELOC is best for those who need access to varying amounts of money for ongoing expenses, whereas a home equity loan is better suited to those needing a specific amount for one large expense, like a home renovation.What About Interest Rates?
Home equity loans typically have fixed interest rates, while HELOC rates are variable. The interest rates for both are typically pegged to an institution’s prime rate, and are often significantly lower than those charged for vehicle loans, credit cards and personal loans.What is Mortgage Refinancing?
With refinancing, you pay off your existing mortgage and obtain a second mortgage for a lower interest rate. With a “cash-out” mortgage or refinance you can borrow more than what you owe on your mortgage. You can then take the extra money and use it for expenses like tuition, home improvements and so on. Refinancing may include costs for mortgage fees and prepayment penalties.What are the Pros and Cons?
On the plus side, home equity loans provide low-cost credit for important expenses. In extreme cases, the risks are that the home market slows and you end up owing more than the value of your home, or that you overspend and default, which means the loss of your home.
For many people the pros outweigh the cons. To be sure if a HELOC or loan is right for you, it is best to consult with a mortgage professional.

How to find the Best Home Equity Line of Credit

A home equity line of credit or HELOC is another type of mortgage loan available in Richmond Hill. As with all types of mortgages in Richmond Hill, the better the rate and terms of the mortgages, the lesser you will have to pay to the lender.  But to get the best HELOC rates, it is necessary to understand how a home equity line of credit works. For a HELOC, you may approach your current lending institution, local bank or the holder of your mortgageit. How to calculate home equity line of credit?Home equity is the difference between the amount owed on a home and the amount the home is worth. In other words, to calculate home equity, subtract the amount of the mortgage balance from the current fair market value of your home. Thus, your home equity increases as your mortgage balance decreases. E.g.: If your home has been appraised for $400,000 and you owe $250,000 on your mortgage, your equity is $150,000.In case you have any other lien or mortgage on your home, that amount must also be deducted to determine home equity.While applying for HELOC, to get the best interest rate in Richmond Hill, keep the following factors in mind:You must have a positive credit history and your payments must be up-to-date for a good credit score. While good credit history is important for all the mortgages in Richmond Hill, it is of special importance under a HELOC. A HELOC is usually a second mortgage. Thus, in case of a foreclosure, the lender holding the first mortgage is entitled to primary rights on the funds from sale of home and only the balance, if any, will be used to pay the subordinate mortgage. Thus, HELOC lenders have stricter credit requirements. You must have a substantial amount of equity standing in your home.  Home equity line of credit involves several upfront costs like appraisal fees, application fees and closing costs that must be taken into consideration in addition to the HELOC rate. HELOC offers flexibility in repayment unlike no other mortgage in Richmond Hill. You may choose to pay only the minimum amount required, which is a portion of the principal plus interest during the term period or opt for a scheme to pay only the interest during the “draw period. At the end of the draw period, you will have to repay the entire principal of the loan amount.Last, you must do a thorough research of the various mortgage lenders Richmond Hill for the best HELOC rates.  For more information, you may contact:Allegro Mortgages Corp.

Home Equity Line of Credit USED for A Mortgage Reduction Strategies 11

The home equity line of credit (HELOC) and the traditional home equity loan are two entirely different things. Their difference can save you thousands of dollars and even slash 13 years from your mortgage.In essence, the traditional credit card and an American Express credit card are seen to be almost the same ” they ARE credit cards. How exactly are they different from each other?The difference is actually quite significant.A traditional credit card such as a Visa or MasterCard charges you a high interest rate but you’re allowed to pay only the minimum balance at the end of each month. With an American Express card on the other hand, you have to pay the balance in full at the end of each month otherwise there will be huge charges for the outstanding balance and interest.The American Express card will cater to your purchasing needs for 30 days but you need to pay off your balance as soon as it is due.So while credit cards seem to be just credit cards, they in fact serve two different purposes. If you do not plan your cash flow, you could be in trouble if you don’t make payments on your American Express card.The same is true with any HELOC and home equity loan account. When you do not know the difference between these two, you might end up paying thousands of dollars in extra interest payments. If you knew how to use it, you would actually be able to take 13 years off your mortgage balance.Lets begin.HELOC interest rates are variable. This line of credit can be secured through your home and you can consider this as your second mortgage.This means that the interest rate adjusts to the prime interest rate. Thus, if the latter increases, HELOC interest rates will also increase. So if your prime interest rate falls, you will get decreased HELOC interest rates as well. Depending on your present financial status, you will even be entitled to enjoy lower interest rates for HELOC which will be a few points lower than your prime rate. When you use a HELOC mortgage, interest is calculated based on the outstanding balance of your HELOC. So if you make payments during the month, the interest will be calculated every single day and is applied to your account. This system of calculating interest is called the variable method simply because the amount of your interest could increase or decrease daily.This makes the variable method completely helpful.You can pay off your HELOC and borrow from it anytime as long as you dont exceed the HELOC limit.Although the traditional home equity loan is quite similar to the HELOC, there are two characteristics that establish the difference.First, the home equity loan operates on a fixed time frame. You have to pay a fixed home equity loan interest per month and you will be paying a fixed interest rate. There are no fluctuations even when the prime interest rate changes. This mortgage will then be considered as a 30-year fixed loan account.The second difference with is once you borrow against it, you cannot borrow from the equity loan at any time. In order to draw funds from this equity loan you have to have sufficient equity in your home and refinance your home equity loan. The perfect time to use the traditional home equity loan is when you require lump sum payments up front and you plan to make small payments every single month. You can pay back both interest and pay extra towards principal. In all aspects, a traditional home equity loan is fixed. The interest-rate, the amount you borrow and the home equity loan payment term is fixed. You cannot change this and you’re expected to repay this mortgage over the life of the loan. The HELOC loan is variable. The interest rate as well as the amount you borrow can change over the repayment term of the loan.Each has its own significant advantages and disadvantages.The one significant advantage of the HELOC that no one talks about is that you can use it as a mortgage checking account. This means that you can deposit your paycheck in the HELOC, pay bills and make electronic bill payments every single month. As you can see this works just like a regular checking account.And heres another undisclosed fact.Do you know that by using the HELOC as a checking account, you can slash at least 13 years off your primary mortgage and save thousands of dollars? In fact, you will be able to get $63,000 worth of savings without spending more or changing your financial lifestyle.Because interest rates will vary and you will be able to withdraw and deposit money anytime, the HELOC is certainly one effective strategy that you can use in order to pay off your mortgage early and achieving a mortgage reduction strategy faster.To get all the latest tips, strategies, and tactics about mortgage reduction , be sure to visit us at mortgage reduction