How To Fix Up Your Home With A Home Equity Loan

Fixing up your home is one of the most worthwhile uses of the
equity in your home. Not only that, but it also adds comfort and
beauty to your home as well – making it even more enjoyable to
live there. Several ways exist for you to be able to get access
to that money that is in your equity. Here are some ways that
you can get that money and some things to watch out for along
the way.

A home equity loan is one that becomes a second mortgage. As
such, it has closing costs and other fees that apply to a
regular mortgage. This means, too that there is an approval
process and appraisal costs. It is like a regular loan in that
you get all the money in the loan in one lump sum and then start
making payments.

These loans are usually adjustable rate mortgages. This means
you have no set interest rate and it will change from month to
month – or from year to year. You can also get a home equity
loan with a fixed rate if you look around, which will give you a
much more stable payment, but will usually be higher than an
adjustable rate mortgage.

One great feature of a home equity loan is knowing how much
money you have to work with – you get it all at once. This does
require you to know in advance how much equity you want, or you
could simply take out as much as you can get. You will want to
leave at least 20% of your home’s value in equity and not borrow
against it. This is so that you do not have to pay Private
Mortgage Insurance. It will also leave you a margin of money in
case you ever should have to move. If you leave no equity at all
in your house, it may become next to impossible to sell it – and
you will be left with no money for a new downpayment.

You also need to know that, as a second mortgage, a home equity
loan gives you a new payment to make each month. For this reason
your lender will base the amount of the loan on both your
ability to pay and your credit rating, along with your total

The amount of time that you have to pay a home equity loan is
less than it would be with a first mortgage. Often for as much
as 15 years, these loans can be adjusted to the time frame you
want – even up to 30 years if you want to keep your payments
low. However, you should also remember that the longer you pay –
the more you will pay in interest.

When you go to get your home equity loan, be sure that you shop
around and get the best deal you can. Besides looking at the
interest rate, you will also want to notice the fees, closing
costs, and other fees that will apply. Lenders can vary greatly
in their terms and fees, so you should look them over carefully
to find the deal that best matches your needs.

About The Author: Joe Kenny writes for,
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