Various reasons lead consumers into taking advantage of using their dwelling as collateral such as in a home equity line of credit. Primarily is the fact that as compared to other loans including, credit cards and other unsecured credit, home equity line of credit rate is lower.
Additionally, the interest paid in a home equity line of credit is tax deductible. Thus, it helps trim down the tax payables. Another factor for the popularity of home equity line of credit on top of the home equity line of credit rate, which is lower, is the fact that you can take out a loan of up to 85% of your total equity on the house.
This is especially important for repairs and renovation necessary to make the house safe and conducive to living. Additionally, consumers prefer to take out a loan against their equity for purposes of children’s education and in some cases, to settle medical bills.
Consolidation of debt is also another advantage of taking out a loan using the house as collateral. This is because of the convenience that you only owe one institution with all your previous and prevailing loans, the home equity line of credit rate is specifically helpful in this case.
You consolidate your debt and you minimize the interest rates payable, on top of the fact that interests are tax deductible. Consumers take advantage of the convenience and flexibility including the lower home equity line of credit rate, however, it should not be forgotten that using your house as collateral entails some risks. Primarily, you are at risk of loosing your dwelling. If it happens to be your primary dwelling, consider the nightmare of eviction.
Financial experts therefore recommend that if you want to take advantage of home equity line of credit and the reasonable home equity line of credit rate, you may need to do your homework.
Search for the most reasonable interest rates, because interests in a home equity line of credit may be variable, you may need to find the lowest interest rate and the most flexible payment terms. If possible, avoid the lure of paying interests only on your credit line; this will avoid being trapped by the balloon payment at the end of the term.
If possible, choose to pay the interest and part of the principal on a regular basis. You may also need to check with the lending institution what are the conditions that will make them consider you as in default and what conditions you may need to follow to avoid balloon payments, which you may not be ready for.
It is thus recommended that you scrutinize the application a bit and ask all the pertaining questions in order for you to make sure that you dwelling will not be at risk in the transaction.
It may also be helpful if you can find other sources of information to guide you with the intelligent decision of acquiring loan against your dwelling even with the consideration of home equity line of credit rate. The internet may be a good place to start even before you contact an
agent.
mr Smith
July 23, 2009 at 9:44 am
You would need to contact a mortgage broker/banker that do hard money loans.
These hard money loans will allow you to borrow up to 50%-60% of the After Value Repairs ARV) of the property. So based on the appraised value you have you would be eligible for approximately $67,000.
If you only need $30,000 then you are within the limits of what you can borrower.
These type lenders will give you a loan amortized for 30 years but the loan would be due in 5 years, some will make the loan due in 10 years, but this is rare. Your monthly payments would be as if you had a 30 year mortgage loan.
Now by the name of the lender you should know that you are not gonna get the very best rates in the world, but you would accomplish what you want to do and that is build your garage and make other repairs that you think are needed.
These lenders look more at the project (Property) as oppose to the borrower and his credit scores and other things that a conventional lender would look at to include most government underwritten mortgages
In most instances your interest rate on loans are tax deductible on your federal income tax.
For tax and legal matters you should always consult your tax consultant and attorney.
After the five years and your monthly mortgage payments made on time you would be able to refinance your home at the appraised value at that time and you would have your garage built and other repairs done if necessary.
I hope this has been of some use to you, good luck.
"FIGHT ON"
jmpoct03
July 23, 2009 at 9:47 am
Wow, with a house that is cash you really should not have that much trouble. Amazing how banks are changing so rapidly.
Keep trying, but maybe ask banks for a 5 year mortgage for the amount you need. They don't advertise this, but banks DO offer short term mortgages, with fixed rates no games.
If you have time go to annualcreditreport.com
and fix anything that is incorrect or outdated if you haven't already done so. Things become outdated after 7 to 8 years.
Also get one credit card, and pay it in full each and ever month for top notch credit. Carrying a balance reduces credit.
Keep trying, there is no reason you should be getting turned down if your house has no mortgage. If you are asking for 20% value they should be throwing it at you.
Try a credit union.
/
justwondering
July 23, 2009 at 12:15 pm
Go to your local banker and take a loan on the land and the mobile home as a whole.
Good Luck!
lehigh_1999
July 23, 2009 at 11:20 pm
It could be either, but probably good depending on the length of your credit history. If it's an old account that helps your credit. Also your ratio of credit balances to credit limits will increase if you close it, which could increase your score.
MetalHeart
July 24, 2009 at 9:08 pm
check http://www.bankrate.com
Grant in Florida
July 25, 2009 at 8:07 am
Yes, you can apply alone. Only your credit will be consider, but also only your income. If that's ok, go ahead. The spouse will still have to sign the disclosures, the mortgage or warranty deed to acknowledge she's aware that property she has some kind of right in is being used as collateral, and the right to cancel.
inabind
July 25, 2009 at 5:53 pm
A couple of years ago, the equity in your home would've been good enough, but not today. Since no investors want to go near real estate these days, and with homes falling in value daily, the "equity" in a home is relatively unknown. There are millions of people bailing on their mortgages and the lenders are stuck with the houses. They don't want to own houses.
I sold my house last fall. I had it on the market for about 7 months. I was still able to afford it, but I was sick of feeling "house poor" as I wasn't really able to save money, and wasn't able to put enough money aside for future repairs (which is essential if you own a home because things will always go wrong). Selling it was the best thing I've ever done. I'm renting a house of similar size in a nice neighborhood, and it's costing me $1000 less each month than the house I owned! And I bought my house before the bubble.
Today, frankly, your options are limited. An equity loan might be a good deal if you can get it and the interest rate is less than you're already paying. However, if you're already in debt, I can't imagine that an equity loan would help your situation. Worse, if you're not able to pay that loan, you can lose the house, and since you bought it in 1998, you should have a lot of equity in it. Have you considered selling it? I know that the market is not great, but in my area, I've noticed houses selling in about a month. And not owning a house has been a tremendous relief for me. If the roof leaks, I don't have to worry about paying for it! Also, it's better to be in control than have the bank in control. Home ownership is WAY overrated. The mortgage interest these days alone is more than rent, and then there's insurance and taxes on top of that. It's a really bad deal.
Mark
July 25, 2009 at 8:45 pm
you definitely should have done research before going into any loan with any bank. Most banks are prime- 0.50% and you probably should have looked around for one that didn't charge closing fees…..the good news is, do your research now, wait a few months and pay off this one with a more competitive offer.
bicafo
July 25, 2009 at 9:30 pm
Good if you dont blow it on something stupid. Good if you want to use it to get out of debt. Bad if you buy material things that dont offer a return on investment.
I took one out on my home to pay off my credit cards, and I made sure to pay it off as soon as I was able. I just sold my condo and as a result, took away a nice profit because I didn't owe anythign on my HELOC.