Home Equity Loans
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Home Equity Loans – The Decision To Improve Your Investment
The upstairs bathroom toilet overflowed and leaked through your kitchen ceiling, dripping rusty-looking water onto your wood floor… Where are you going to get the funds to fix this very noticeable problem? The checkbook isn't always flexible enough to cover unexpected home improvement projects, so you need to find an alternative money-source… preferably quicker than yesterday. The soundest choice for many homebuyers is to take out a home equity loan.
A home equity loan is often a lifesaving solution for many homeowners. How wise is this decision? Is your project worth depleting your home equity? For many homeowners, the answer is yes. The risks and advantages of removing home equity before its time is well worth exploring:
- Purpose – Many homeowners save their equity until retirement and use this source to finance their golden years. A home equity loan used to finance sound projects that improve the home (for example, patio) or the household's quality of life (for instance, a student loan) which can either enrich the home's value or owner's ability to pay off the initial loan faster.
- Timing – How long do you plan to live in the home after acquiring the loan? A home equity loan must be paid off in full and closed before selling the house. Since a home equity loan is considered a second mortgage, the home equity loan must be paid off before any other type of loan can be considered.
- Repayment Schedule - A home equity loan carries an interest rate which is slightly lower than an initial loan and a time period that is generally 5 to 7 years. A wise homeowner will make effort to “stay ahead of the game” and repay the loan far earlier before the loan period ends. The consequences of not repaying the loan in a responsible manner can lead to foreclosure or liens on your property.