Credit: Austin via Pexels
The price of housing has gotten so astronomical lately that it’s only fair that, sometimes, your home gives something back. If you’re savvy and connect with a great mortgage broker, the longer you’ve made regular payments, the more leverage you have to borrow funds.
For more on this, please continue reading.
Home Equity Loan
Some things in life were always expensive but have only risen in price. Other times, life throws curveballs your way, and there are unexpected costs you must bear. In either situation, homeowners can apply for a home equity loan to get the money they require.
Here’s how it works. First, an independent assessor will determine your home’s current market value. Then, a mortgage broker processes how much you’ve paid off and how much it’s worth to determine the rate at which they’ll lend.
Usually, the lump sum payment has a fixed interest rate that costs much less than could otherwise be found. Experts recommend using loans secured with housing carefully for things like home renovations which increase your home’s value, or post-secondary education. Failure to repay can result in the loss of your home, so don’t take out such loans frivolously.
Home Equity Line of Credit (HELOC)
Perhaps what homeowners need is an ongoing line of credit rather than just one lump of money. They can still use their home’s equity as collateral but may prefer a Home Equity Line of Credit.
Such an option lets you access the money as you need it, so you only pay interest on funds you actually use as you use them. This arrangement is better suited for people with open-ended plans. For example, it may be hard to know how much a renovation will ultimately end up costing or when it’ll be finished.
If you’re looking to borrow money for a competitive rate, it’s hard to do much better than a HELOC.
The term “second mortgage” has a tendency to scare or confuse people, but it shouldn’t! It’s a very common way for homeowners to borrow money to consolidate debts and pay off higher-interest loans.
A great mortgage broker can help you avoid bad credit and save up to $1,000 monthly, which adds up very quickly! You don’t need to fear that your level of debt or income will prevent you from accessing badly needed money.
The right mortgage broker will work with you, even if you’ve been denied by the bank. Some banks only lend to people who fit into a very narrow profile and shy away from those with unsteady or unconventional sources of income.
Don’t worry or feel any stress or anxiety if a bank refuses to lend to you. There’s always a mortgage broker who will, and they’ll walk you through your options and explain whether a HELOC, home equity loan or second mortgage is right for you.
Making enough money to afford modern life is increasingly difficult. Homeowners have an incredible financial tool they can draw on — their home! Keep the above in mind if you’re tight on cash, and let your home give something back to you.