Home Equity Loan Breakdown
Could you be in the market for a new home equity loan? A home equity loan is a loan for a fixed amount of money that is secured by your home. You repay the loan with equal monthly payments over a fixed term, just like your original mortgage. Once you get the money, you cannot borrow further from the loan.
The Process Breakdown:
It’s safe to say that the home equity loan process is similar to getting a mortgage. Shopping around and comparing rates and costs from different financial institutions should be first on your “to-do” list. When you have chosen an institution like AmeriChoice, you will begin the application process. Application details include information about yourself, your finances and your home. After you apply, you will need to provide a variety of documents to verify your information, such as tax statements, pay stubs, bank or asset statements and details about any property you own. The loan process works very much like standard loans and the turnaround time may take anywhere from 10 to 60 days to close.
One major benefit of a Home Equity Loan is that you can use it for more than one thing. For example, you can use it to pay for higher education or even tackle those home improvements before winter. Home Equity Loans could also help in case an emergency occurs.
Knowing when to choose a Home Equity Loan over a Home Equity Line of Credit (HELOC) is important. This could be determined by answering some questions.
Do I need the money in a lump sum, or in several installments?
If you think you need the money right away, and in full, then a Home Equity Loan is for you.
Is it for a long-term purpose or a short-term purpose?
If you are using the money for something that will last, like a new roof, a Home Equity Loan is the right choice. If you want to use the money for something short term, like a wedding reception, consider a line of credit.
How big of a monthly payment can I handle? A home equity loan requires you to pay principal and interest every month for the entire span of the loan. A line of credit allows you to pay just the interest for several years.