Home Equity Loans

There may come a time in many people’s lives when home equity loans can be a big help to their financial situations. The values of homes have increased greatly over the past years in many areas of the country. Tapping into that increased home value may make sense in many situations.

Home equity loans are a great way to get the down payment on a second home. Perhaps you want to buy a rental home and have a second income. Or you may want a home for a relative or an older parent. Your grown children may need help in buying a starter home. It could be a wise investment for both of you, that pays you back many times over in the appreciating value of the home.

Another example of how you might use a home equity loan is to buy a car. When you are a cash buyer, the car dealer may give you a much better deal. You have the power to negotiate, and to walk away if you don’t get exactly what you want. You are not hoping for their approval. They have no power over you.

When a child is going off to college, many people consider home equity loans as being preferable to typical student loans. One reason is that student loans may not be discharged in bankruptcy. No one is planning on that happening, but some people might sleep better at night knowing that their loan is not of that “till death do us part” variety.

Some people use home equity loans to pay off credit card debts. They might be making a mistake. Although the interest is lower, they have just turned un-secured debt into secured debt. Now the debt results in a lien on their house and a loss of home equity. The next thing you know, some of these people run up their credit card debt all over again and are in the same situation, except now they also have used up their precious home equity.

Home equity loans can be wonderful for a variety of needs, but be sure you are not wasting your equity to pay off credit card debt for restaurant meals and shopping sprees. Use your home equity loans wisely and they will be a benefit to you and not a regret.

How to apply for Home Equity Loans

This is an easy loan to get, because it is secured by your home equity. There is very little risk to the lender, and the lenders love to make these loans. There are equity loan offers everywhere you look these days. So be sure to shop around before you choose. Look at many different sources and compare their interest rates, points, fees, etc.

With the advent of the Internet, shopping for home equity loans has never been easier. There are plenty of websites offering loans from banks and other financial institutions. Some companies have loan broker sales people who work on commission and who use high-pressure tactics to put pressure on prospects. Avoid anyone who is pushy or who tries to impose some artificial time deadline pressure.

Interest rates are at historic lows and there is no rush. Take your time and compare offers. Tell the loan officer that you are shopping and if they want your business they can sweeten their offer, lower some fees, cut a point, give you a better rate, etc. Make them work to earn your business. They make a very good living and earn a lot of money so they can easily afford to bargain with you.

When it comes to home loan lending, there are so many providers to choose from it can be confusing.

How do you choose the best of the many home loan lenders that are available?

Step one is to take your time and do your homework. Shop around and get competitive rates from a lot of sources. Don’t just take the first loan you find.

Make the lenders work hard for your business.

Step two is to see yourself as doing them a favor, instead of you asking for one. These home loan lending companies make a very nice commission on your loan. They will bend over backwards to get your business. You have something they want, the income they will earn from putting your loan together.

Always remember that you are the customer and the customer is king.

Step three is to get the firms to compete for your business. After you narrow it down to three home loan lending companies, tell all three that you are impressed with all three and that you will let the best one earn your business.

Ask for something extra, a lower interest rate, lower closing costs, better terms, you name it. Often times, one company will throw in a sweetener to earn your business away from their competitors.

Keep in mind that right now the housing market is not booming like it once was, and home loan lenders are scrambling to maintain their business levels. They are much more flexible on their terms and are more aggressive on their lending offers.

In conclusion, home loan lending is like any other business. The companies all want you as their customer. So make them work for your business.