Home Equity Loan-Is It For You?

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Is Home Equity Loan A Good Idea?

It seems almost impossible to turn on a radio or a TV these days, and not hear about how you can make your house work for you, no matter if it is a bill consolidation loan, money you want to fix up your house or to go on a vacation. And your house would love to lend a hand. A home equity loan seems like a perfect solution doesn’t it? Money in your pocket, and there’s nothing to it as long as you own your house. But is it really just that easy? And is it for you? Let’s take a look.

Do You Qualify?

home equity loan

First of do you qualify for a home equity loan? To find out, you need to know the current value of your home. That calls for a real assessment, not a guess. Then you need to know the amount outstanding on any mortgages, or loans against the house. Finally, you take ¾ of the assessed value less the outstanding mortgage and/or loans, leaving you the balance that would be available for a home equity loan.

For example:       House Value  $100,000

                               ¾ of Value    $75,000

                               Mortgage      $60,000

                               Equity Avail.  $15,000

If you are approved for a home equity loan, then in most cases you would qualify for a fifteen thousand dollar loan in this example.


There is a wide variety of terms that you can get for a home equity loan or line of credit. With a loan, the entire face value of the loan is deposited in your account and you begin to pay interest on all of it from day 1.

In the case of a line of credit, the face value is made available to you but you are not charged interest until you begin to draw money from the line of credit. It depends what you need the money for, and how much how soon as to what type suits you best.

What Kind of Home Equity Loan Do I Need?

The length of repayment of the loan, and whether it is renewable are all important points to ask about when you are shopping for a loan. Also inquire about all the costs associated with the loan, and whether or not there are set-up fees or closing or discharge fees. Often there is a cost for registering the loan against your house, and the cost of the initial home value assessment too. Remember that financial institutions are not there to be your buddy, they are there to make money. Your job is to get the most favourable terms you can that fit your specific needs.

Don’t be afraid to shop around for your home equity loan. There are a lot of lenders out there that want your business, and it isn’t necessary for you to have done business with them before. Just because you have kept your money at the Bank of X since you owned a piggy bank, doesn’t mean that they will give you the best terms. And you don’t owe them the favour of going to them blindly for your home equity loan and accepting whatever they will give you. This is business, it isn’t about being palsy walsy with the bank teller.

Let’s Recap

1. Determine if you really need the home equity loan to begin with and if you can make payments on a loan if you get one.

2. Determine how much money you have available for a potential loan.

3. Shop around for your loan and your terms.

4. Make all your payments on time. It matters to your credit score.

Till Next Time….

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Sigrid McNab

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Email: sigridmcnab@gmail.com

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About Sigrid McNab

Sigrid McNab is the author of #1 Amazon Best Seller, speaker and the CEO and Founder of sigridmcnab.com. Sigrid specializes in blogging, attraction marketing, and generating highly qualified leads. Sigrid teaches people how to build a successful online business.

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3 Responses to “Home Equity Loan-Is It For You?”

  1. Hale Yes Says:


    I looked in my financial dictionary and it must be out of date. I didn’t find “palsy walsy” in their anywhere? :)

    Nice job – as always.

    Dr. Hale
    Hale Yes recently posted…What is Your Secret – It Might Make You Millions!My Profile



  2. Chery Schmidt Says:

    HI Sigrid, This is my first visit. I do like what you have done here with your blog as well as this post. I did take out a home equity loan a few years back to help my son purchase a house. His payments came to $279 a month, but I went a head and set this up so he could make a $100 payment each Thurs (Payday) This way he pays more down on the principle, this does have to be approved when taking out a home equity loan though so make sure you ask if you are going to have to pay a penalty if you pay the loan off early. Most of the time you will. So be sure to get this documented if you do plan on paying off this home equity loan early. Thanks for sharing Chery :)
    Chery Schmidt recently posted…Change Your Financial Future Forever World Wide Pre-Launch AppMy Profile


    sigrid Reply:

    Hi Chery, thanks so much for stopping by and for your kind comments. Thank you also for the excellent example and the good advice. A prepayment option on your home equity loan is something that you should always include, even if doesn’t seem like it would be possible to take advantage of it. As with all legal documents, read all the fine print. After all it’s your money…



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