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Your Home Can Do More
Your house has provided a lot for you over the years. It has given shelter to you and your family, it has given you memories, it has given you a place to call your very own. Can it possibly to do any more? Yes! Your house can help you afford things you normally could not. This is called a home equity loan, AKA a second mortgage. When you originally buy your home whatever the down payment you made on your mortgage is the current equity you have on your house. As the value of the house increases so does your equity. You can use this equity to get a home equity loan to help you pay for such things as medical bills, college tuition and home improvement. There are two types of equity: home equity loans and home equity line of credit. A home equity loan gives you your loan amount in one lump sum, which you will pay off over the length of the loan at a certain interest rate. This works kind of like a mortgage would. With a home equity line of credit you can take out certain amounts at certain times depending on what you need, with the max being the total equity you have on your house. All equity loans use your house as collateral, so if you default on the loan payment they can take your house.
A Real World Example
Back in 1992 you bought a house for $150,000. You made a $20,000 down payment on the house. At the start of your mortgage you would have $20,000 in equity and owe $130,000 on the mortgage. 2000 rolls around and you have paid off, hypothetically, $18,000 of the principal (not including interest) on the house. You now have $38,000 in equity, you can use this to take out a home equity loan or establish a home equity line of credit with. However, your house can also increase in value. Let's say the area around your home has improved dramatically since you built it and your house is now worth $250,000. Since your mortgage only covers how much you bought the house for, you now have an extra $100,000 in value on that house. Combine that with how much you have paid off in principal, $38,000, you now have $138,000 in equity.
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Free Mortgage Refinance Quote!
At Fastmortgagerefinance.net we offer you a chance to get a free mortgage quote. The quote will tell you, based on the information you input, what kind of mortgage is best for you and what you can afford. Why go through all the trouble searching, we can get you your free quote in a matter of minutes. Don't delay, get a quote today.
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Fast Equity Facts
- Home equity is a secured loan that uses your house as collateral
- Home equity loans are also referred to as second mortgages
- Home equity loans can give you a line of credit and a lower interest rate then an unsecured loan could.
- Home equity loans are great ways to pay for college educations, home improvements, medical bills and other costly, unforeseen expenses.
- Home equity loans are becoming more and more common in today's society.
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