Home » Finance » Loans

What You Need To Know About Home Equity Loans

Aug 17, 2007
A home equity loan is a popular and attractive source of borrowing for thousands of people. Part of the reason people think first of a home equity loan when they need a substantial sum of money is that home equity loans are marketed extensively, with advertisement in every medium.

Lenders love home loans because they are highly risk free. Therefore, a home equity loan is easy to get and offers one of the best interest rate of any type of high end loan.

A equity loan is attractive for consumers, not only because of the low interest rate but because that interest can be deducted from income taxes. The outlook isnt completely rosy for consumers who are considering a home equity loan, however.

With any home equity loan you can borrow only up to 80 percent of the equity youve accrued in your home at the time of your loan application. If, for example, your homes current market value were 150,000 and the balance on your mortgage was 70,000 you could borrow 80 percent of the 80,000 equity, or 64,000.

Consumers should not make the decision to take out a home equity loan lightly. Nor should they borrow to the maximum 80 percent just because they can. Borrow only what you have to have.

Not only will this save you money in the long run but a loan officer who sees you being foolish about your willingness to put yourself in debt and your home at risk may think twice about your having the responsibility to pay back your mortgage - and on time.

Sometimes a home equity loan is used foolishly for a vacation or toys such as boats and other things that the consumer could really do without. The borrower assumes that their home will appreciate in value over the term of the loan so it really isnt like borrowing or paying interest, is it?

What if the home doesnt appreciate? What if the local mill or factory or other major employer closes down and the town loses a big chunk of property taxes and people move it and then the retail shops lose money and so forth and so forth. If you dont live in the Mid-Atlantic States or the rust belt talk to people who did or do. Hear what they have to say about the likelihood of this occurring.

No matter where you live downsizings, mergers, company closures, layoffs and buyouts are commonplace. There is just no way to predict that your home will appreciate, your job will be secure and youll be financially better off at the end of the loan and throughout the life of the loan.

A home equity loan, while often a wise thing, and a necessary action, shouldnt be taken on for frivolous desires.

There are occasions, such as lowered home mortgage interest rates and to get out from under high interest unsecured loans such as credit card debt when a home equity loan can save you money and improve your credit standing. When this opportunity arises, assuming you have the equity and can afford the payments, a home equity loan can be a very wise decision.
About the Author
James Copper runs Any Loans - http://www.any-loans.co.uk/no-credit-check-loans.shtml - a no credit loan specialist.
Rating:
Please Rate:
(Average: Not rated)
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources