Can you answer aidal1135’s question about Equity?:

I just finished building my house and I have no mortgage or anything as I had enough cash to buy the land and build outright. But, I have no money left to landscape and have some medical bills I would like to pay off. Can I get a home equity loan or line of credit on my house? Which is better?

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Equity is simply the value of a property after all debts have been deducted. If your home appraises at $300,000 with a home loan of $150,000, you have $150,000 in equity. Whether you realize it or not, this equity can get you through hard times or provide you with a funding resource. Let’s look at some examples.

Medical Emergency

If you get though your life without any financial emergencies, you are considered a lucky person on the earth. Unfortunately this luck does not follow most of the people on earth. We can’t foresee any emergencies which may happen in the future. If you don’t build your wealth at the current time which you can control and plan, you be dragged into a deep debt problem and face a serious finance crisis if any unforeseen emergency pop up which suddenly need a huge amount of money to resolve the problem.

Example of common emergency is serious medical treatment in major illnesses and serious accidents are required huge amount on medical bills. If you ever run into this situation, you will be extremely thankful if you have purchased a home. With a home equity, you can get a home equity loan easily or get a home equity credit line to cash out the needed money.

Loss of Income

Sudden loss of income may lead your to trap into debt. Your credit card debts and other high interest rate debts will start to accumulate if you miss your monthly payment due to loss of income. If your have ever build your wealth with home equity, now it will become your financial crisis saver to minimize the negative impact. With your home equity, you could easily do a debt consolidation with home equity loan. Home equity loan is carries much lower interest rate and have a flexible repayment term for you to choose from. By consolidate your debts into one home equity loan. You monthly repayment will be much lower as compare to your other high interest rate debts. Thus, it reduces your financial burden and buys you some time while you are sourcing for new income.

Education

College tuition is not cheap these days and the education expenses on your children may be very costly and can be a nightmare for parents. Home equity can put an end to college tuition nightmares. You can borrow the money against your home equity to pay for your children’s college expenses.

Summary

Home equity is built over time. As equity builds, you create a pool of money to access in trying times. Growing equity is a great way to pursue wealth building and it can provide a financial cushion when life gets hard.

Cornie Herring is the Author from “StudyKiosk-Credit Basics”- http://www.studykiosk.com/creditbasics. “StudyKiosk-Credit Basics” is an informational website on credit basics, debt consolidation and bankruptcy.



Thanks to Cornie Herring for contributing this article to our Equity blog:

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Can you answer patsy m’s question about Equity?:

My credit is not good right now because I have a lot of medical bills that I have to pay off along with some other debts. But I do have a lot of equity in my home. I need to know how can i get my equity to work for me.

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The needs that demand larger money can be made easier with the home equity loan. Home equity loan helps the homeowner to renovate his home or meet the expenses of son’s wedding etc. with easy financing option.

Home Equity Loan are secured against the equity of your home means borrower uses equity in their home as collateral. These loans are helpful in financing the major home repairs, medical bills, education expenses, wedding expenses or holidaying.

The term home equity defines the market value of borrower’s home after deduction of the debts which are taken on behalf of borrower’s home.

The home equity loans is secured against the home of the borrower so homeowners with bad credit history like CCJ’s and IVA, defaults, arrears and bankruptcy can also apply for home equity loans.

The amount against the home equity loans is depended upon the equity of the home i.e. lender check the previous debt on home equity if taken and then compares it with the market value of the home that is put as a collateral. If the value is more than the debts then he offers home equity loan. But if the value of home is lesser than debts then also borrower can avail larger amount i.e. by clearing off debts or by increasing the value of your home through home improvements or renovation

The interest rate charged on the home equity loans is higher if the loan is taken for shorter duration whereas interest rate goes down when taken for longer duration. Usually, home equity loan can be availed for repayment duration up to 30 years.

Borrower can avail home equity loan at cheaper rates especially if they opt for online mode. As online loan market is flooded away with the online lenders that are ready to provide the home equity loan at the cheaper rates.

While considering the home equity loan, borrower must make sure that they are paid back in time so that you avoid falling into worse situation.



Thanks to Johan Jeuring for contributing this article to our Equity blog:

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