A home is one of the most valuable assets most people will ever own. Building up equity - appreciation of the property coupled with the percentage of ownership achieved by the mortgagee through regular loan payments - is an important aspect of home-ownership. Equity is valuable not only as a solid asset, but also as a tool to help homeowners in times of financial struggle. Circumstances can change quickly – a job is lost or the breadwinner is laid off; a sudden illness generates large medical expenses; or a host of smaller debts becomes unmanageable. Overwhelming conditions call for clear-minded decision making to stabilize personal finances. A Pennsylvania Home Equity Loan used wisely is an implement to balance out the negative effects of sudden or accumulated debt.
Using accrued equity in the home as collateral for a PA Home Equity Loan will provide the needed funds for a family to scale a monetary brick wall and emerge on the other side better able to manage home finances. The rationale for utilizing home equity to obtain cash is that a new mortgage loan can be drawn up to get the current debt under control instead of having more unpaid, interest-gathering, finance-charging debts. A PA Home Equity Loan results in a three-fold benefit: the capacity to deal with the immediate need for cash; a way to consolidate several debts; and the means to keep the household budget from sliding into deeper debt.
Since the home is used as collateral, the loan is usually a re-finance on an existing mortgage. PA Home Equity Loans can be written with fixed or adjustable rates, although they lean more towards adjustable rates. Tax deductable interest rates on a home equity loan are inherently lower than those charged by credit card companies, so the advantage here is lower monthly payments and more cash on hand. More monthly cash converts to less overall debt. A PA Home Equity loan may fill the need for cash, but a workable understanding of each phase is vital to using that loan to every advantage. Therefore, a ‘look before you leap’ attitude is best to insure a reduction of debt, not an increase.