A home equity line of credit or loan is also known as a second mortgage. It is a vehicle that a home buyer can use to leverage the built up equity in his home as collateral for a low rate debt. The line of credit can be used in a similar fashion to a credit card, however, the loan option is usually a closed end debt which is similar to a first mortgage.
The maximum amount that a homeowner can borrow is based upon their status with the lender. Established borrowers who have shown good faith may get 100% equity while a new customer may only get approximately 85% equity. These loans are usually repaid over a period of 15 years. Sometimes this length is longer or shorter though based upon the results of a person’s application.
On the other hand, a home equity loan is disbursed as a lump sum of cash. Similarly, the funds may be used for large expenses or major home repairs. Both home equity options must be repaid. home equity loans have fixed terms, whereas home equity lines of credit are available for a specific length of time.
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Bankruptices and foreclosures won’t stop a refinance. But to get approved, bankruptcies must be two years old, and foreclosures at least three years old.
To mortgage loans obtain a credit card from a credit union you must become a member by opening a deposit account. However, you will likely find that credit unions offer competitive rates on deposit products too, perhaps better than the rates you get from major banks.
The interest charged on the home equity loan is much less and therefore they end up saving a large sum of money. They’ve done that using the equity that they’ve already worked hard to acquire, it’s a win-win situation.
Home equity loans can be procured by all types of borrower. Bad creditors with arrears, CCJs, IVA, late payments and missed payments can easily apply for these loans.
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