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[B454]Best Home Equity Loans

by Alan Lim, Ala

Essential criteria

If you are a first time borrower of a home equity loan it is imperative that you have a checklist of essential questions that you need to ask each and every lender. The answers to these questions will provide a valuable reference to base your comparisons on.

?What's the interest rate? Knowing this is crucial. The interest rate will determine the monthly payment you will need to make. You also need to know if the interest rate is of a fixed or adjustable nature. Fixed rate implies that the monthly payments will remain constant, while an adjustable rate implies that rates will fluctuate depending on market conditions.

?In adjustable rate, when will rates change? If your interest rate on the home equity loan is of the adjustable variety, you need to know three things: when the rate is going to change (that is under what conditions), how frequently will the rate change and what's the average percentage by which the adjustable rate will change.

?What is the Annual Percentage Rate or APR? The APR on the home equity loan will determine the yearly payment you will need to make towards this.

?How much do I need to pay in points? Usually points are closely related to the interest rate on a home equity loan. The higher the payment in terms of points, the lower is the interest rate.

?What are the applicable fees? There are various types of fees included in a home equity loan such as appraisal fee, broker fee, document preparation fee, funding or lender fee, application or loan processing fee, underwriting or origination fee, etc. Knowing the applicable fees can help you know what to expect in the monthly statements of the home equity loan. Plus it will also help manage and plan your finances better.

?What's the duration of payment? The time period within which you need to pay off your home equity loan will determine to a large extent the state of your current finances. Having a longer duration means that you can space out the installments better and thus save more.

?Is there a balloon payment? Many times a home equity loan will require you to only make payment towards the interest every month. Then at the end of the loan payment duration, the entire principal amount will need to be paid by you in full. This is also known as balloon payment and can significantly eat into your expenses when it comes. To avoid this, it's best to ask the home equity loan lender if such a condition exists. This will allow you to be prepared for a financial crisis later on.

Home equity loans provide you access to low rate financing so you can invest in your future. Whether you are looking to save money by consolidating your debt or invest in a college education for yourself or children, home equity loans are there. Additionally, home equity loans can be used as a tax deduction under the right circumstances.

Saving Money By Consolidating Debt

Consolidating your short term debt into one home equity loan can cut your rates in half or more. Interest savings can be in the thousands. And you don't have to worry about multiple payments to different creditors.

By using your equity, you can pay off credit cards, personal loans, and outstanding bills. With the low rate home equity loan, you can trim years off your repayment plan, even with a smaller monthly payment.

Consolidating your debt also allows you to select terms and payments that fit with your budget. So you can opt for a fast track payoff schedule, or take care of your debt in smaller chunks.

Investing In A College Education

A college education is often financed by a home equity loan. Measured as part of your assets when applying for financial aid, you might as well use it as a low interest loan.

Most types of financial aid programs are unavailable to those attending school less than full time. So financing your education with your home equity can help you secure a low rate loan.

Upgrading Your Home With A Remodel Or Repairs

Using your home equity to remodel or repair your home will benefit you in a couple of ways. First, you will have great rates. Second, you will improve the value of your home, further increasing your equity. And finally, you can write off more of your interest charges on your tax returns by using the loan to improve your home.

No matter how you choose to spend your equity, make sure you get the best lender. Look online for loan quotes and compare to be sure you don't get caught on high rates or fees. And know that you have control over the terms, which give you maximum flexibility.

Article Source : Pg. 48

About Author

Both Alan Lim & Carrie Reeder are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Alan Lim has sinced written about articles on various topics from Colorado Springs Refinance, Flirting Tips and Online Dating. For complete and holistic information on this topic, consult the experts at . There's no better place to find out what you need to do.. Alan Lim's top article generates over 135000 views. to your Favourites.

Carrie Reeder has sinced written about articles on various topics from Finances, Mortgage and Finances. Visit for a list of home equity loan lenders online. View our recommended. Carrie Reeder's top article generates over 135000 views. to your Favourites.