Is a Home Equity Loan Your Home Improvement Solution?By Debbie Wilson
Loan Page Columnist
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If you've been waiting and waiting to remodel your kitchen, or any room in your home, a home improvement loan in the form of a home equity loan, just might be the answer for you. But in order to see if a home equity is right for you, it is important to gather as much information as possible regarding your home improvement needs and specific facts pertaining to home improvement loans.
What Is a Home Equity Loan Anyway?A home equity loan is a specific mortgage loan that allows you to borrow money from a financial institution and use your home's equity as collateral. In theory, you are taking out a second mortgage and turning equity into cash, which will allow you to have funds available for home improvement projects, debt consolidation, education, or other expenses. Still confused? Don't be. Equity is just the difference between how much your home is worth and how much you owe on your current mortgage or mortgages. The less you owe, the more equity you have.
How Do Home Equity Loans Work?In a typical home equity loan, you borrow cash against the equity in your home and then repay that equity over a specific period of time in the form of a second mortgage. In most cases, equity loan fees and closing costs are paid upfront and either a fixed or variable rate applies to the remaining balance.
But before you sign on the dotted line to any home equity loan, make sure you read the fine print. According to the Federal Trade Commission, there are many lenders out there who don't have your best interests in mind, including those who issue home equity loans with high rates and fees to unwitting consumers looking to finance repairs or home improvements. Just remember, if you're borrowing against the equity in your primary residence, you have the legal right to walk away from that home equity loan if you change your mind, for any reason, within three days of its issue.
The right home equity loan will not only help you complete your remodeling dream, but it will also offer you peace of mind financially, as well. So go ahead and build that dream kitchen today and be the envy of the neighborhood tomorrow.
About the Author
Debbie Wilson owns and operates a lakeside resort, managing all aspects of operations, including marketing and promotion.
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