Link to a forum : Home Equity Line of Credit

10-10-2005
First comment from this forum :

"When I purchased my house back in March of this year, I did an 80/20 split. The 20% is in the form of a $50,000 home equity of line of credit. When I got approved for it, the interest rate was 6%. Since then it has steadily increased each month and currently resides at 7.25% as of my last bill.

I would like to try and refinance this, however when I went to my local credit union, they told me they would only finance up to 80% minus what I owe on the house.

I asked them if I could roll both the mortgage and home equity line of credit into one fixed rate 30-year mortgage. They said I could, but that I would have to pay PMI. Why would I have to pay PMI?

What would be the best way of lowering the home equity line of credit?

If I get a sizable tax refund at the end of the year, should I put it towards the home equity line of credit, or to improvements/upgrades in the house?"

see this forum at : http://forums.kiplinger.com/showthread.php?t=3886

Article : Getting a Home Equity Line of Credit

Consider getting a home equity line of credit with your mortgage. Here's why:

• Credit cards are a good thing, but a home equity line of credit is even better.

• A credit card is a revolving line of credit that you use when you need it, and make payments only if you use it. But credit cards can come with a high price — sky-high interest rates.

• A home equity line of credit is also a revolving line of credit that you use when you need it, and make payments only if you use it. But, unlike most credit cards, the home equity line of credit comes with a low price — rock-bottom interest rates.

• And, unlike credit cards, the interest paid on a home equity line of credit is usually tax-deductible.*

Two for the Price of One

It can make sense to take out a home equity line of credit at the same time you get your mortgage, or when refinancing your current mortgage. It's easy to see why:

• One simple closing for both mortgage and line of credit
• Up to $100,000 line of credit
• Low interest rate
• Make payments only if you use the money
• Revolving line of credit
• Low closing costs**
• Interest paid may be tax deductible*

* Consult your tax advisor.

** Some states require the payment of taxes based on the mortgage amount.

source : http://www.doityourself.com/stry/hequitylineofcredit

Article : What Exactly is a Homeowner's Loan?

By Ezilon.com Articles
Nov 12, 2005, 20:15

What Exactly is a Homeowner's Loan?


The term "homeowner's loan" has created a lot of buzz in the past few years, mainly because it is not a formal tag for any kind of loan. Rather, it is a general label for many types of credit extended to a homeowner whenever he or she would use his or her own house as collateral to secure the grant of a loan. There are quite a number of homeowner loans that you could avail of, so it is not correct to say that you simply want to apply for a homeowner's loan. Determining which type of homeowner's loan is most suitable for you is the first step that should be taken with this general kind of loan agreement.


Home Mortgage Loans

The most popular kind of homeowner's loan is a mortgage loan. This isn't really a homeowner's loan, technically speaking, as your full ownership of the house would be suspended until such time that you fully pay off the mortgage. You only have inchoate rights to the housed pending full satisfaction of the mortgage loan. However, because of common usage, mortgage loans have been included under the general umbrella of homeowner's loan.

A mortgage loan is a great alternative to renting. The latter does not bestow any equity over the house. At the end of the lease agreement, the rent you have paid would be for naught, whereas with a mortgage loan, you would be able to use the house under a mortgage loan even during the period when you are striving to pay off the same.

The way it goes is that you would have to pay the down payment for the house you are considering. Make sure that you pay at least 20% of the total amount. This would assure lower taxes and levies for you. The balance would then be paid by the creditor. You would have to pay the creditor what is due to him in stated installments, plus stipulated interests. As security, the creditor would get to keep the deed to the house. This deed would be passed on to you upon full satisfaction of the mortgage loan.

And as we've mentioned earlier, you would get to use the house even during the pendency of the mortgage. This is indeed a better alternative to renting as you would get to gradually acquire equities to the house you have decided to buy through such a route.


Home Equity Line Of Credit

And speaking of equities, we have another kind of homeowner�s loan based on the same. It is called a home equity line of credit. Basically, a home equity line of credit is a credit line that uses your equity to a house as collateral. Equity simply refers to the rights to the house which you own. A house under a mortgage loan, for example, which you have paid 80% of would give you 80% equity over the same home. This 80% equity would be used as security for a home equity line of credit.

As is commonly practiced, once you have attained substantial equity over a house under a mortgage loan agreement, you could apply for a home equity line of credit to pay off the mortgage. This would extend the maturity date of the original loan as it would be replaced with the new one, and if the new loan imposes a lower interest rate, it would be a better alternative for you to pursue.


Basic Homeowner's Loan

There is, of course, the basic kind of homeowner's loan, that is, a loan that is granted with your house as collateral. This presupposes the fact that you are the full owner of the house. It should be under your name. Whatever purpose you�re planning for the loan, be it to pay for some existing obligations, or to establish a startup business, you would be able to avail of some credit by using your house as collateral.

It goes without saying that with any kind of homeowner's loan you want to avail of, you would need a good credit score to position yourself for favorable benefits like lower interests rates and other applicable fees. Also, you should be fully committed to comply with the terms of the loan. Loans are always a double-edged sword. They can be used to make life easier or harder for you. It all depends on how you use them.

source : http://www.ezilon.com/information/article_13636.shtml