Own a home? Need some cash? Learn about equity loans for buyers
Before we launch into information about equity loans and buyers we must first explain to you what an equity loan actually is! Basically, this allows a current home owner to borrow money from the bank by using their house as collateral. However, the home must be owned outright, and have no outstanding mortgage attached to it. In simpler terms, you can, in fact, mortgage your house a second time in order to get some cash.
Why should you take out an equity loan, rather than a regular loan? For starters, equity loans usually have a lower interest rate and they are easier to obtain if you have a bad credit rating. Moreover, repayments made on these types of loans may be considered tax deductible.
Before you race ahead and apply for an equity loan, you must be aware of some important details. First, and probably most importantly, if you fail to make your repayments you are at risk of losing your home. Another to watch out for are scammers: There are people out there you claim to help you get the best deal on your equity loan when, in fact, they intend to cheat you out of your most valuable asset.
Now that you know the benefits and risks, where can you apply for an equity loan? Banks and credit unions are a good place to start, but a useful thing to do is to ask family and friends who have taken out equity loans. Make sure you compare and contrast all offers you receive to find the best equity loan for you.
- Tax_Rebate - Flickr