In these economic times, more people are paying attention to their overall financial picture, which includes their debt levels.  Over the last decade, rising real estate values have led to wave of home equity loans as homeowners looked to tap their grossly overvalued home values.  Now these same people are looking to pay off their debt, but how best to pay off an outstanding home equity loan can require a bit of thought.

Let’s look at the two common methods:

Loan Refinance:

Provided you qualify for a lower rate on your existing loan, you could refinance at a lower rate.  Assuming you continue making the same payments, you will pay off your loan faster since more money will be going towards principal with each payment.  But you also have to factor loan fees, such as origination and application fees, which you will be required to pay with a home equity loan refinance.

Now if you have a 1^st mortgage and home equity loan on your home, and the combined value of both loans is less than 75-80% of your home’s current market value, you could refinance both loans into one primary mortgage. But considering how far housing prices have fell in recent years, this isn’t likely an option for most homeowners.

Extra Principal Payments:

If you are fortunate enough to have some extra income, you could always pay more than is required every month. Every extra dollar you pay will go straight towards your loan principal.

Ultimately what works best for you will be determined based on your budget, timeframe, and other factors.

When you are a homeowner the temptation will always be there to use the equity in your home to acquire a loan. Homeowners are often bombarded with offers for home equity loans in television advertisements, direct mail, and through phone solicitors, all offering tempting rates and tempting amounts of cash. This can often be overwhelming, and it will take a certain amount of will power to not fall into the trap. Read the rest of this entry »

It is recommended by many financial experts that you have some form of emergency savings in place in case the unexpected happens. These can be things like emergency medical expenses, accidents, and any other unexpected expenses that may arise during the course of everyday life. When you have emergency savings you will be better prepared to meet any financial emergency with ease and less stress and panic. But, what is the best course of saving for an emergency? There are certainly some dos and don’ts that you should be aware of that can save you money in the long run. Read the rest of this entry »

The quality that home equity lenders look for in borrowers is termed ‘creditworthiness’. This is a combination of three things: credit history, income, and loan-to-value ratio.

Credit History

Lenders can look up your credit history at any time by going to one of the credit bureaus. These are companies that gather and collect information on the amount of debt a borrower owes and whether the borrower pays his bills on time. This information is summarized in a credit report, which condenses a borrower’s credit history into a numerical score. This score is then calibrated by referencing a scale from 300 to 850. The score is occasionally referred to as a FICO score, after the company that pioneered credit scoring, Fair Isaac Corporation. Read the rest of this entry »

Large, unexpected expenses like procedures not covered by medical insurance or home repairs can leave consumers in a cash crunch. But if you are a homeowner and  have equity in your home, a home equity loan may be just the trick to help you get back on your feet.  But when you talk to a home equity lender, you’ll learn that there are really two types of equity loans: a home equity loan and a home equity line of credit. Read the rest of this entry »

If you own your home and are in need of some extra cash, why not consider a home equity loan? If you have equity in your home, difference between your home’s appraised value and any outstanding mortgage debt, a home equity lender will grant you a loan using this equity as collateral. While you can use this money for anything you wish, most homeowners use their equity loans for new car purchases, home remodeling projects, etc – large one-time expenses. Read the rest of this entry »

Just about any financial planner would recommend that a person keep some money stashed for emergency expenses.  Otherwise, how else would you pay for a large, unexpected expense such as a leaky roof, a totaled car, job loss, etc.?  If you have money set aside, you don’t have to be stressed out at the time of need. Read the rest of this entry »

In a nutshell, debt consolidation allows consumers to roll up all of their high interest consumer loans, namely credit cards, into one loan. Most of these loans are actually home equity loans in disguise as the lender is issuing a second mortgage on the consumer’s home. Read the rest of this entry »

Fixed rate home equity loans are great for consumers who need a large amount of money upfront to fund a home improvement project, pay out-of-pocket medical expenses, or any other need. Payments remain stable because interest rates are fixed for the term of the loan. Read the rest of this entry »

If you have a house with underlying equity and find yourself needing some extra cash, a home equity loan may be a good option. When you find yourself facing significant out-of-pocket expenses it’s likely too late for a traditional unsecured loan. When this happens many homeowners turn to home equity loans.  However, before you jump into anything you want to make sure you find the best home equity lender. Read the rest of this entry »