Home Equity Loans: Choosing a Loan and a Repayment Optionby Karen Lawson
Loan Page Columnist
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You've heard the joke: "I owe, I owe, so off to work I go." But with careful planning, you can use some of your home equity to take care of major expenses. When shopping for a home equity loan, it's a good idea to do some advance planning and research.
Home Equity: A Financial Tool for Fixing Your BudgetIt's important to do some research and planning before approaching lenders for a home equity loan. Here are a few things you should know in order to find a home equity loan that best accommodates your budget.
Getting the Loan You Need vs. Getting the Loan You WantThe amount of equity in your home can change depending on factors such as:
If you bought at the peak of a real estate boom, you may want to think twice about taking out a home equity loan for non-essential expenses.
What are the Options for Repaying a Home Equity Loan?There are a variety of home equity loan products with different payment options available. You can take out a second mortgage loan that is amortized over a period of years and requires monthly payments. Or, your loan may require small initial payments with larger payments toward the end of the loan term. Another option is a "silent" equity loan that requires no repayment until you sell your home.
Be sure to ask questions of your lender, and seek the advice of a financial advisor to determine the features and benefits of the home equity loan that's best for your needs.
About the Author
Karen Lawson is a freelance writer with more than fifteen years of experience in mortgage lending. She has an MA degree in English.
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