Today is

By: Ikedi Ani-okoye

Equity Loans

This type of loan allows you to take advantage of some of the equity (i.e. estimated market value) tied up in your house. Equity loans are most often related to the home and can be used for a number of  purposes, these may include:
Improving your home
Debt Consolidation
Purchasing a the luxury car you always wanted
Or a well deserved vacation.

With house valuations increasing considerably over the last 10 years many people have become unaware of equity loans as a way of raising finance.

An Example of an equity loan- a homeowner has a house valued at $200,000 and you have mortgage left to pay of say $50,000 because your have payed a high proportion of you house of you can use that money i.e. $150,000 as equity or a (trade off) to take out a loan. A Equity Loan can be very useful if your existing mortgage lender have a redemption penalty in place if you decided to you could get an Equity loan that wouldnt incur any charges, as it is independent from your mortgage company

Second Mortgage

is a loan taken against your home where  there is already a first mortgage. Payment of the first loan will always be priority where a second loan is taken out on your property. So, if you enter any agreements to pay of the loan because of a default, you need to clear your first loan before paying off the balance on the second loan.

How to get an Equity Loan mortgage second?

Getting a second mortgage is like taking out the first Mortgage on your home. You have to shop around for a suitable loan offer by going to different lenders and getting quotes. Then comparing the quotes, you should then compare and find the offer that will cost you the least. Once you have done this then you can provide the paper work to the lender. Lender will the conduct an appraisal on your home in order to find out its current value and complete all the steps that are necessary to complete the loan processing so that he can arrange for the closing. At the closing stage, you will sign the ‘note’ and other documents as required by your lender. You will also need to pay closing costs like you would have done with your first mortgage.

Common mistakes when applying for an Equity loan Mortgage second

-No knowledge of pre-payment penalty clause

-Not shopping around for the best loan

- Not getting the Good Faith Estimate

-Thinking that home equity loan is fully tax-deductible

-Assuming a home equity loan is cheaper than car loan or credit card

-Pay off credit card balances from home equity line of credit when your expenses are out of control