In life, we sometimes come across certain situations where we may require a large amount of financial aid, may be to complete your college educations, or apply for higher education, or may be to pay off a big bundle of unpaid loans.
It is in such circumstances that we require a huge amount as a loan which might not be an easy task to apply for without giving collateral worth its amount. This is where Home Equity loans come in as a great alternative.
Simply speaking, a Home Equity loan is the one in which the borrower borrows the loan money from a financing institution by keeping his home as a collateral against it.
Collateral is the real estate property that you keep with the lender as a guarantee that you will payback the debt. If you by any reason fail to payback the loan amount you owe to the lender, the lender can take possession of your collateral and sell it in the market to get its money back.
Equity can be defined as the difference between the price that your house is worth and the amount which you owe on it. It can also be known as the financial value of a real estate property beyond any sum you owe on it for claims, loans or mortgages.
Home Equity Loans can be categorized in to two types:
A home equity loan or a second mortgage is the scheme through which you can borrow bulk total amount worth your collateral in just a one-time lump sum. Such a loan is then paid off by the borrower over a fixed amount of time, for a fixed rate of interest and fixed monthly payments. Such type of a home equity loan is also known as a close ended loan.
HELOC or a home equity line of credit is more like a credit card account because it has a circling balance. A HELOC facilitates the borrower to borrow in installments. He can borrow only a certain amount of loan money which he needs instead of borrowing and keeping to himself the total lump sum amount.
We at TheLoanBazaar.com provide our clients with both the types of home equity loans to suit the varied requirements of all our clients.
A HELOC loan gives a borrower more flexibility in terms of rate of interests and the loan money installments as well as the pay back options, as compared to the fixed-rate home equity loans.
A line of credit home equity loan has adjustable interest rate that varies throughout the loan term. And therefore, monthly payback payments also vary depending on the varying interest rates.
While approving home equity loans to you, each lender will have their own procedure and company policies with the help of which they’ll decide how much money they are ready to give you for a home equity loan.
But what is more important is that regardless of the lender you have chosen for taking home equity loans with, be it a reputable financial firm or a known lender, it is crucial for you to critically go through all the paper work that is involved while applying for the loan. The monthly payment terms might vary from one lender to another, and so would vary the interest rates and the overall life term of the loan.
Some lenders might also require you to payback a large amounts like the balloon payments towards the end of the loan term, while others may include a handful of service fees on your repayments money, increasing the overall cost of your loan.
We at TheLoanBazaar.com make sure that no hidden cost and information is kept from you while providing you with the detailed information about your loan type and procedure for payback. With us, what you are told is what you get, and nothing more is added to your repayment without your prior knowledge.
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