Video: What to Consider Before Borrowing Home Equity – Home Equity loans were very nearly taboo for quite some time but their coming back into favor. In favor of an equity loan as opposed to a personal loan, mortgage rates are still low (make no mistake, this is a type of mortgage or home financing, as your home is uses as collateral). There are a few cautions along the way to taking out a Home Equity line of credit. This video covers a few of those considerations. ~Bill
Video Transcript: What to Consider Before Borrowing Home Equity
Welcome to today’s home update, I’m Julia. In the first quarter of 2014 lenders approved 13 billion and home equity loans and lines of credit also known as HELOCs. Economic conditions have continued to improve as the recession gives way to rising home values across the country. While this shift signals the beginning of a renewed confidence and borrowing against a home equity, home owners should tread carefully. If you’re considering borrowing, bankrate.com advises keeping a few important facts in mind. First with fixed interest rates and payments, home equity loans may be safer option. HELOCs have variable rates so an increase may be detrimental to your payment plan. Second, be aware that lenders still require adequate income and credit, and most will set a maximum limit of 80 to 85% of the home’s value. Third, know that debtor habits can spell disaster for those who borrow Equity against their home. don’t borrow for unnecessary expenses such as vacations. Homeowners should work toward paying back the loan quickly, however it is acceptable to extend the life of the loan if making an investment in the home such as a kitchen renovation. Thanks for watching Today’s Home Update, see you next time.
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