The Basics About Second Mortgage Equity Loans
If you are in the market for a second loan, i.e. a mortgage equity loan, then you are looking to receive a lump sum of money. Whether you intend to use this money to remodel, pay off bills or invest is up to you. An equity mortgage loan would be a great way to tap into extra financial resources if the lender wasn't going to be using your home as collateral. It makes sense, obviously the lender needs monetary security and when you're looking to borrow a large amount of money, your home is the best collateral you own when applying for an equity loan.
Equity mortgage loans are an available option for every home owner. However, if you have credit issues, then the second mortgage equity loan might not be in your best interest. Unfortunately trying to take out an equity loan when you have existing credit problems might prove difficult since you may not get the best interest rate available. You don't want to end up paying an even higher interest rate even if it means having money now.
Home equity loans intentionally offer higher rates, since it is a second loan. However, the rates are factored by the secured interest rates on credit cards and other loans. In other words, you are getting a loan to payoff the higher interest rates on credit cards, car loans, or other secured loans and paying the new loan with the new interest rate that it offers. If you are paying off debts with higher interest rates, then of course a second loan could prove worthy.
Some lenders will offer great repayment rates on a secondary loan. For example, one writer pointed out that if you took out a loan in the amount of $10,000 in credit card debt at 15%, then a secondary loan repayment would equal $278. The writer continues by showing an illustration that if you, the buyer, take out a secondary loan with a 15% on a home equity loan over a fifteen-year term then the repayments would be around $140. Thus, you can see second mortgage equity could be worthwhile.
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