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Are you planning to obtain home equity loans? If yes, then before you go on with your borrowing plans, you must be sure about what a home equity loan has to offer you.
In a home equity loan, the home of a borrower is used as collateral for the lender. If a borrower fails to payback the loan, then the lender can take charge of the house and sell it to compensate the debt.
Eligibility criteria:
You need to check the eligibility criteria before you apply for the loan. Many lenders make it a point, that you must have at least 20% equity in the home. Equity is the difference between the current market value of the possession and the amount still owed on the mortgage. Your lender will even check your previous credit history, your credit score and your income source to check your viability. The better deal will go to the borrower with good credit score. If you lack on that, then start working on your credit report. Your income is also very important, as it suggests that you can afford the loan payments.
The benefits of a home equity loan:
The advantages are numerous. Home equity loan is basically famous because it provides you money when you need it most. Suppose you have urgent work to finish off and need money, then a home equity loan can save you. The interest rates on home equity loans are fixed and don’t fluctuate now and then to increase your discomfort. You can payback your loan through easy monthly payments. The payment period can be stretched from 5 to 30 years, depending on the terms and conditions offered by lender and the amount you owe.
The shortcomings:
Home equity loans are helpful, but not completely foolproof. You know the benefits and you must be aware of the disadvantages too.
- Difficulty in payment will snatch your asset: If you aren’t stable in your career and doesn’t have steady income source, then it’s advisable for you not to think of home equity loans. You may loose your house if you can’t payback your loan.
- Home value may plummet: It can cause you a great trouble if the value of your property drops. You’ll end up owning more than the value of the house.
- Leasing will not be possible: You won’t be able to lease your house during the term of the loan.
Any type of loan must be dealt with carefully and when it’s home equity loan, you must be doubly cautious. After all, nobody would like to loose his or her house due to some impractical mistakes.
An energy efficient mortgage (EEM) (or "green mortgage")[1|http://en.wikipedia.org/wiki/Energy_efficient_mortgage#cite_note-1] is a loan product that allows borrowers to reduce their utility bill costs by allowing them to finance the cost of incorporating energy-efficient features into a new housing purchase or the refinancing of existing housing. [2|http://en.wikipedia.org/wiki/Energy_efficient_mortgage#cite_note-2]
Borrowers who qualify for an EEM need to complete a home inspection by an energy rater working off qualification standards created by the U.S. Department of Energy. The results of this energy audit can then be used when applying for an EEM.[3|http://en.wikipedia.org/wiki/Energy_efficient_mortgage#cite_note-3]
First introduced in 1980, EEMs are currently sponsored by all mortgage programs insured by the U.S. federal government. To date, the popularity of the product has been somewhat limited: The New York Times estimates less than 1% of all U.S. home loans are EEMs.[4|http://en.wikipedia.org/wiki/Energy_efficient_mortgage#cite_note-4]