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Understanding
Your Mortgage Options
Explaining
Equity Loans
Time
For A Refinance Loan?
Is
A Home Equity Loan Right For Me?
Home
Loan Tax Breaks?
Glossary
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Is
A Home Equity Loan Right For Me?
The
equity in your home is one of your most valuable financial
assets. While a home equity loan is a great resource for letting
you benefit from that asset, it does carry risks. Failure to
repay the loan could mean the loss of your residence. Make sure
that you honestly answer these questions before getting one.
Do I need a
home equity loan?
Will I be able
to repay the loan?
Will I be able
to keep my other debt down?
You can use
the loan for a number of different things including making home
improvements, paying off debt, buying a car or taking a vacation.
Some home equity loans can even be tax-deductible, but you should
consult with a tax expert for questions on that issue.
You
will find most loans come with variable interest rates, some come
with attractive low introductory rates, and a few come with fixed
rates. You also may find most loans have large one-time up front
fees, others have closing costs, and some have continuing costs,
such as annual fees. You can find loans with large balloon
payments at the end of the loan, and others with no balloons but
with higher monthly payments.
No one loan is right for
every homeowner. The challenge, then, is to contact different
lenders, compare options, and select the home equity credit line
best tailored to your needs. Be sure to review the home equity
contract carefully before you sign it. Do not hesitate to ask
questions about the terms and conditions of your financing.
To
avoid an unsafe loan here are some tips to remember:
The lure of
extra money or the chance to reduce monthly credit payments can
be very costly in the long run. High interest rates and other
credit costs could get you in over your head.
Credit
insurance may not be a good deal from a lender. If you want the
added security of credit insurance, shop around.
Don’t
sign a loan agreement if the terms are not what you were given
when you applied.
Ask for an
explanation of any dollar amount, term, or condition that you
don’t understand. Federal law is very clear about what
credit and loan term information must be provided in writing
when you apply for a loan and before you sign any agreement.
In addition,
shop around for the best loan terms and interest rates. Contact
lending institutions, such as banks and credit unions, and
consult a legal or financial advisor, or someone you can trust
before you make any loan decisions. Or contact your local Fair
Housing Office, legal aid, or senior services organization for
information and help.
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