Home Equity Loan and Mortgage Insurance
Are financial lenders really doing you a strong favour by offering you insurance for your loan? Insurance on a home equity loan or mortgage is there in case something happens to the person paying for the loan. In the event of death or serious injury (check the small details on each insurance plan carefully to see what is covered and what is not!), the outstanding loan amount will be covered. This can save your beneficiaries much hassle and expense.
Check to see if the loan is conditional on you signing up only for the lender's insurance plan. You may be able to save lots of money by simply shopping around for your own insurance policy. Mortgage insurance is of course much like any term-life insurance. Both policies have specified expiry dates, and will only pay a benefit if the person covered dies.
By not being able to choose your mortgage or home equity loan insurance plan provider, you may be stuck with inflexible terms and little overall control over the insurance policy. You may not be able to choose the beneficiary for example, or worse still, just how much you will be expected to pay for the insurance. If this is the case, you best look for a different mortgage or home equity loan lender.
How Do I Get A Good Home Equity Loan?
A home equity loan is available to most people who own their own home. The homeowner will use the equity in their home - that is the built up value of the home in excess of any still owing - as valued by the lender using a set of criteria. This is the usual first step in applying for a home equity loan. Well, second, you first have to find lenders to apply to!
There are many lenders large and small offering home equity loans. So not only shop around for the best rates and flexibility, be aware of whom you are dealing with. There are many reputable mortgage brokers and other lenders who can offer you this type of service. Be sure to know the history and financial standing of the company you are dealing with. A good place to start may be with your current mortgage holder if there is one.
Many home equity loan lenders will allow the consumer to apply online. Again, be careful of where you are transmitting your personal information. Most of these applications are very detailed and will need you to include many financial details that crooks or others would love to get their hands on. Whenever transmitting a form like this on the Internet always ensure you are on a secure connection. Look in the URL bar for 'https' instead of the usual 'http'. This denotes a secure connection with the server, and don't forget to look for the lock symbol on your Internet browser to be in the 'locked' position. If the application of the lender does not feature these tools, do not transmit your information this way. Ask them to mail you the necessary forms, or better yet, see if they have an office to which you can personally visit.
Avoiding Home Equity Loan Scams and Pitfalls
A home equity loan is the choice of many consumers when in need of money for various reasons. Consumers need to be reminded that a home equity loan is a loan against what may be your single largest asset - your very home. In this world there are plenty of sharks looking for an easy meal, and a consumer in desperate need of money may make an easy mark.
The following are some of the things consumers should consider as red flags and warning signs when looking for a home equity loan.
If you are one of the millions already struggling to pay your bills but have equity built up in your home you may think you are a prime candidate for a home equity loan because of that equity. But be careful, you are taking out a further loan, and if you were having trouble paying the previous bills, you may not be able to keep up with the new payments owing. And for some lenders, this could be the plan.
There are some lenders who don't care if you can't repay the home equity loan. In fact that is their real goal, for you to fail to meet the legal requirements of the home equity loan - that is full repayment on schedule, so that they may foreclose or otherwise seek immediate monetary redress against you. So if you hear your lender saying that they will work with you if you fall behind, or that you should 'pad' your earnings on your initial application for the loan, you should be very suspicious.
Home Equity Loan Terms Explained
In this article we will try to explain the terminology the average consumer will encounter when looking for a home equity loan. A home equity loan, also known as a second mortgage allows a homeowner to borrow money using the equity in their home.
Mortgage
A mortgage is a temporary and conditional lien or claim against a property. The claim or lien is granted to a creditor as security for the mortgage debt. A mortgage also refers to the contract or deed that specifies the terms of a mortgage.
Equity
Equity as it pertains to a property is the residual value of the property beyond any outstanding mortgage or liability.
Fixed-Rate Loans
Fixed-rate equity loans are as they sound - the payment and interest rate of the loan are set for the lifespan of the loan. The fixed-rate loan allows the borrower of the loan to receive a single lump-sum payment. Terms on fixed-rate loans can vary from 5-15 years or more depending on the lender.