Check This Out - A Home Equity Line of Credit Calculator

Check This Out - A Home Equity Line of Credit Calculator
By Peter Kirkham

If you are interested in obtaining a home line of credit or an equity loan of another type, there are a great many resources at your disposal which can help you to prepare for the application process and let you know what you might expect if you decide to go ahead.

There are a great many banks and lenders who offer these financing options, but each of them will also have their own limits and restrictions that you will need to be aware of. Using the home equity line of credit calculator is a great way of knowing what you might expect of any bank that you approach when the time is right.

You will first need to have your home appraised officially, and this will cost you anywhere from $250 to $500 out of pocket.

This is a necessary expense, and any bank that you approach will acquire you to have one done. If you run into an issue where you are working with a lender and have your own appraisal in hand, only to learn that they want a new appraisal done by their own recommendation at your additional expense, it may be best to find another lender.

Closing costs and fees are usually enough of a load to bare for you, so adding more debt on top of this is just not fair to you.

The things that you will be asked to enter into the home equity line of credit calculator will include the current appraised value of you home, the total amount that you currently owe on your home, and the loan to value ratio you are hoping to pull out of your house with this loan.

Be sure to remember that each bank is different, and while one will only ever loan you the amount of money that would top your lien out at 80%, others are willing to exceed 100% of your home's worth. It is important that you decide how much you need in order to accomplish your goals with this loan, and try not to be carried away by the thought of extra money.

You may or may not be asked to leave some basic personal information, such as your first name and your email address. You may also be asked for your phone number on some sites which offer a home equity line of credit calculator.

If you do not wish to divulge this information, you have other options just a few clicks away from the original tools that you found.

Remember that this loan is meant to help you, and if it doesn't look like your situation will be improved by moving forward with a high interest, low loan to value ratio loan, then you might want to hold off just a bit longer before moving forward.

Be careful not to give your social security number until you have made your final decision about a lender and are ready to commit to the loan process with the bank of your choosing, as this will save you from extra hits on your credit report.

To discover more information about credit calculator have a look at Equity Credit Calculator

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Check This Out - A Home Equity Line of Credit Calculator

Fixed Rate Home Equity Line of Credit - Sounds Good, But Is It?

Fixed Rate Home Equity Line of Credit - Sounds Good, But Is It?
By Peter Kirkham

Sometimes you can save a little money on the front end with a variable rate home equity line of credit, but a fixed rate loan will be more predictable, and you'll always be able to budget for your loan payment every month because the minimum payment will be unchanging. There are several different reasons that people will take out a fixed rate home equity line of credit, so if you're thinking about doing any of these things, this is an option you might consider.

One traditional reason that people take out a line of credit on their home is for home improvements.

If you moved into your home several years ago and are ready to start laying new flooring, replacing kitchen appliances, or doing more major repairs and renovations like adding on or knocking out walls, a fixed rate home equity line of credit could be a good way to go. One way to be sure that this line of credit pays off is to insure that the improvements you're making will actually increase your home's value.

This way, you're taking out a line of credit against your home's current value, but you're making your home worth more, which actually raises the equity you have in it. Don't, however, improve your home for more than it would sell for in your neighborhood; even if you plan on staying in your home for a while, you'll still want it to be salable just in case, and you can't sell a house that's worth much more than those in the surrounding neighborhood.

To be sure that you aren't putting more money into your home than you'll get back out of it, check out the average prices of the homes in your neighborhood, and don't add a lot of features that your neighbor's homes don't have.

Another reason to take out a home equity line of credit is to make a major purchase. Maybe you want to take the vacation of a lifetime, or maybe you want to put a pool in the backyard. Either way, be sure that you're making a wise financial decision and that you'll be able to pay back the loan easily.

Also, see what you'll end up paying once the interest rate is added in. You don't want to end up paying $15,000 for your $10,000 vacation when you could have saved up for part of it in the first place!

One final reason that some people use a fixed rate home equity line of credit is to consolidate existing debts.

While a line of credit isn't the exact same thing as a home equity loan, it can be used in much the same way. You'll use the credit you get because of your home's equity to pay off higher-interest debts like credit cards and cars. Then you'll be left paying off the line of credit on your home, which probably lowers your monthly payments and certainly lowers your interest rates.

Article Source: http://EzineArticles.com/?expert=Peter_Kirkham
Fixed Rate Home Equity Line of Credit - Sounds Good, But Is It?

Home Equity Line of Credit (HELOC) Basics

Home Equity Line of Credit (HELOC) Basics
By F. Smith

Home Equity Line of Credit (HELOC) is term to describe loans that uses a borrower's home as collateral. Also referred to as home equity line, lenders determine the maximum loan balance available where homeowners could draw credits at their judgment. Like all typical loans, a predetermined interest rate is agreed upon based on current market rates.

HELOCS should not be confused with other home loans such Reverse mortgages for example. Unlike Reverse Mortgages, the total amount of credit could not be released upfront but funds could be steadily drawn from the credit in a period usually lasting anywhere from 5 to 25 years. Borrowers are not required to make immediate payments on the drawn funds, only that they make a predetermined minimum payment.

Loans could be paid in increments during the draw period but all remaining balance must be paid before the loans maturity date. At the end of the draw period borrowers are expected to payback the full principal of the loan made. They are also required to pay a HELOC balloon payment and male payments based on a loan amortization schedule.

These types of loans offer borrowers a degree of flexibility in terms of loan repayments. Homeowners may choose a number of payment options which only require them to make pre agreed minimum interest payments.

HELOCS are similar to having a credit card line. Credits are drawn in a specific period against the maximum available home equity. Like credit cards, borrowers are required to make minimum monthly payments until credit are fully paid.

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Home Equity Line of Credit (HELOC) Basics

What is Home Equity Line of Credit (HELOC)?

What is Home Equity Line of Credit (HELOC)?
By Mabia Williams

The home is often the most important and valuable asset that a person has, and hypothecating it to the loan provider can turn out to be risky, since the creditor can liquidate the house if the borrower defaults upon the loan repayment.

That is why individuals generally prefer to avail these types of credit facilities, or a similar Line of Credit for more important issues such as education, paying medical bills, or even major home improvement plans, rather than to meet day-to-day expenses.

How a home equity loan works

The loan basically helps to tap the extra potential available with the home. Generally, when a mortgage loan is taken out the mortgage amount is decided upon the valuation that is carried out for the guarantee or the collateral provided by the loan applicant.

Usually the house acts as the guarantee for the credit facility. Moneylenders maintain a certain reserve while calculating the mortgage loan amount, and depending upon the Annual Percentage Rate (APR), always pay the applicant an amount that is less than the actual cost of the house.

Mortgage loans generally extend for many years. When a house is mortgaged, it cannot be mortgaged again for another mortgage loan, unless the ongoing mortgage loan is paid off. So it is not possible to avail an addition sum of money from the same house offered as collateral. Now it so happens, after a couple of years, the property appreciates in value, and the house becomes more expensive.

So its worth increases, and if a new valuation is done on the house, its current potential to draw a higher amount from the mortgage increases. In simple words, the maximum limit of money that can be obtained from the mortgage loan increases with the passage of time, and this "extra" potential can be tapped to bring in more money.

The lender provides an additional loan by using this "extra" potential available in the home. This is how Home Equity Lines of Credit (HELOC) work. If one wants to know how to apply for home equity line of credit, this article tries to provide some information related to home equity that can be useful to the applicant.

Applying for an Equity Loan

Banks generally decide upon the equity loan amount by deducting the sum of money still owed on the mortgage, from a new valuation amount that is obtained by a fresh appraisal carried out regarding how much the homes worth currently.

So if the new appraisal decides your home is worth, say $100,000, and you still need to pay $75,000 to your existing mortgage lender, your home equity loan amount would be $100,000 - $75,000 = $25,000, depending upon the APR selected by the lender.

It is very important to know that in most cases the lender would not consider the exact appraisal amount difference, i.e. in the above example if you have a potential of $25,000 on your home, the lender will finance a sum less than $25,000.

Generally banks and credit lending institutes offer between 75% to 80% of the appraisal difference amount in the form of home equity loan. Another important factor deciding the maximum loan amount is your credit history and FICO score. The better your credit ratings are, the greater the loan amount you stand to avail.

Difference Between HEL & HELOC

The difference between HEL and HELOC is that, you can avail an average in HEL (Home Equity Loans) and pay offer over a exacting period, whereas HELOC loan (Home Equity Line of Credit) is which you can avail amount as per need with a limit and payback has to be done within specific time.

The advantage of HELOC Loans obscure that of HEL but lastly it lay on the situation and the opinion of loan applicant. So if you do not have good credit ratings, it is recommended to go in for a credit repair program and subsequently apply for your home equity line of credit.

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What is Home Equity Line of Credit (HELOC)?

The Risks Associated With a Home Equity Line of Credit

The Risks Associated With a Home Equity Line of Credit
By Barry Dawn

To fully understand what a home equity line of credit or a HELOC is, you need to chunk this into two terms: home equity and line of credit.

* Home equity - is the market value of your home less the total amount of debts that are associated with or registered to it.

* Line of credit - also referred to as a credit line, it is an arrangement wherein a bank or a lender extends a specified amount of credit to a borrower for a certain period of time.

Combining the two, you get the term "home equity line of credit" (obviously) which is a form of revolving credit and which takes your home equity as collateral. Anytime you need money, you can make use of - or in mortgage lingo, DRAW from - your credit line.

Basically, a home equity line of credit works in the way a credit card does. As long as you don't go beyond your credit limit, then you can continue to draw money for needs such as medical bills, tuition fees and home improvement expenses.

Please note that using money from your home equity line of credit should be done sparingly. This should only be used for really important payments or purchases. Drawing money from your home equity line of credit to pay for everyday expenses is not a wise idea. This is because of the ultimate risk that's associated with this financial option - as outlined below:

The Ultimate Risk: Foreclosure

In this kind of financial option, non-payment of your dues could result to the foreclosure of your home, as is the case with other mortgages - Toronto or elsewhere. Therefore, you should make sure that you attend to your dues in a timely manner.

Although you can only pay the "minimum," it's always a wiser idea to pay more than that. This will ensure that the amount for repayment will considerably get lower - and to assure that your monthly payments are not only used to cover for the interest rate.

Other Risks

Note that with a home equity line of credit, the "health" of your credit limit largely, if not entirely, depends on the market value of your home. If you lender senses that the value of your home significantly decreases or if they have sufficient reason to believe that you cannot keep up with your monthly payments, they may either freeze your account or reduce your credit limit.

In both cases, you should talk with your lender. Ask them how you can restore your account. You should be able to prove to them that the value of your home has not considerably decreased. You should also show to them that you are still well in the way of being able to make the necessary payments on a regular basis. Your argument would bear more weight if you can show some proof. So provide documentation if you must.

When talking doesn't seem to solve the problem, then you may consider shopping for another line of credit. Of course, look for the best mortgage rate - Richmond Hill or elsewhere. With any luck, you can get an arrangement that allows you to pay off your original home equity line of credit with another one.

And when some things still remain unclear, suit up and get help. Mortgage and credit professionals run aplenty and they'd be more than happy to be of service to you.

Article Source: http://EzineArticles.com/?expert=Barry_Dawn

The Risks Associated With a Home Equity Line of Credit