23 Apr
There is a massive difference between mortgages and home equity loans. Usually, a first mortgage is the initial loan taken to purchase a home. In this case, you can settle for the second option of the mortgage with the aim of covering some part of your already purchased home. Also notable is that the latter loan can be issued from refinancing your home with the purpose of cashing out some of the amounts. Well, before you settle for either mortgages or equity loans, it is critical to understand these differences.
There are times when life can be quite expensive. It could be financial constraints due to a wedding, chaos from an impending home remodel, a student loan or insurance that requires more financial footing. Of course, such times call for emergency financial help. Most people do not know that there is always an easy way out in such cases: home equity.
Home Equity
Home equity is often versatile and operates as a credit card. Most of the time, banks issue home equity based on the value of an individual’s home. From there, you can spend as much or as little as you want depending on how expensive your needs are. Moreover, common home equity offers you a lump-sum amount of money upfront. Here are a few things you can do with your home equity.
Financing Education: for those who have children in school, there are times when life becomes tough. For example, exams could be approaching, and as we all know, most often than not, exam fee will always be required for a student to sit for an exam. At such moments, your bank can issue you an equity home loan.
Healthcare: health is often the first aspect that controls our existence. Without health, we are nothing. Well, diseases are unpredictable, and we can barely usually tell when they will knock. Therefore, health is always treated as an emergency and the sooner a patient sees a doctor, the better. In case of health emergencies, a home equity loan will solve the situation.
Financing a second home: if you are thinking of owning more property, a home equity loan will suffice. All too often, these loans are issued at a relatively lower interest. You can use your first home as the collateral and get another home. That way, you shall have become a homeowner yet again. Well, the cycle can continue in such cases as the second home can get you a third home.
Home equity loans are flexible compared to mortgages. This is in light of your ability to always control your balance as well as your interest costs. Besides, you get to only pay the interest rate depending on the amount of the money you have. However, the issuer of that home equity can cancel the funds before you get the chance to spend the money. This means that there are challenges appended to the flexibility of home equity. An additional advantage of home equity is the fact that interest rates have variables.
To learn more on how to get the most of your mortgage, contact us today.