Can you answer Melissa O’s question about Equity?:

My husband and I are currently paying PMI (Private Mortgage Insurance) on our mortgage. (We have no second mortgages.) I know we need twenty percent equity in order to eliminate PMI, but I don’t think we’re quite there. Is taking out a home-equity line of credit to pay down the mortage a good idea? I know that we’d then have two loans to pay, but the PMI would be eliminate and all of our payments (minus the interest) would be going toward the loan rather that insurance. Is it possible to get a home-equity line of credit for 6%?

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Can you answer Kristen A’s question about Equity?:

We are married in our 40’s with a baby. I am stay at home mom and my husband was laid off. We have two homes and no debt aside from mortgages. Should we use our home equity or cash in retirement to make ends meet until we have another income?

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Can you answer BamaboynTN’s question about Equity?:

I’m wanting to add on to my home but I’ve never used a home equity loan. I have used the refinance method where you borrow a little extra to add on. What would be the best now, with the way the economy is and the interest rates unstable?

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Can you answer Arcy ☼’s question about Equity?:

residential or comercial, are they the same thing???
what will get more equity???

what is the best investment that I can make????

Real Estate Asset Management

Making use of the equity

It will always be advisable to seek home equity loan using the equity in that home. You may not have built enough equity in the home, but it will be advantageous to do so because this is what lenders are looking for. The equity in the home is considered as a second or added investment in the property. This is beneficial to your application in that the more valuable your collateral, there more favorable the terms of the home equity loan.

Build equity in the home

Another shortcut to have your home equity loan approved is to use that loan for the building of more equity in that home or adding more value to the existing equity. It is more practicable that a loan can be granted for an improvement of the collateral rather than doing something else. With this in mind, it may be necessary to put forward a plan of action of your intended investment to the lender. Most lenders will want to see it. They may at times want to disburse the funds in relation to the progress of the work. It therefore becomes necessary to give them a detail plan of carrying out the work.

Communicate positively to the lender

It is not always good to base your mind on the home equity loan. It may at time be necessary to see into the livelihood of your property. Therefore, make sure you disclose everything that might negatively affect the property. Take note that some lenders are very smart. Any failure to make such disclosure may still be detectable by them.

While persistently searching, be patient

Be unrelenting in your search. Do a lot of research through a variety of home equity loan officers. While doing your search, be patient to get the outcome. Do not attempt to influence the outcome of the decision. This is one of the principal causes of the rejection of most home equity loan applications. I think any rapid results ought to be based on the contents of your application.

Check for hidden corners

There are certain hidden corners when making an application for home equity loan. If you are too concerned with getting the loan, you may not be able to make out these things. Check if there are current fees related to the application. Do not base your mind on the actual amount of rates. Focus on the entire price tag on that home equity loan. Also check for the loan features. Take note that the more elastic the loan, the more you make yourself liable to higher rates.



Thanks to Alan Lim for contributing this article to our Equity blog:

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