With a low-interest home equity loan and good credit, you can pay off debts with high interest rates. You don't have to have equity in your home to get a second mortgage. You can borrow up to 25% of the value of your home. With low rates, you can cut your payments by as much as two thirds.
Advantages of a loan for 125 percent of the home's value
The main benefit of a 125 percent home equity loan is that you can get lower rates than what you are paying now on your short-term loans. In fact, you're not adding to your debt. You are actually swapping one rate for another.
When rates go down, your payments go down right away. With a home equity loan, you can also keep making the same payment but pay off your debt in fewer years. This will save you even more money in interest charges.
Financial companies will lend you money if your credit history is good and they think the value of your property will go up. You and your lender both hope that your home will go up in value.
125 percent home equity loans are for people who plan to stay in their home for at least a few years or until the value of their home goes up a lot. When you use a home equity loan to pay off debts, you have more options for the length of the loan. So loans can last anywhere from five to thirty years, which affects the size of the payment and interest.
Find the best rates on loans.
Before you sign any loan contract, take the time to look for the best loan rate. There are now a lot of financial companies that offer 125 percent home equity loans, so it shouldn't be hard to get loan quotes online.
It's just as important to compare closing costs as it is to compare rates, because this can be a hidden cost. By looking at the APR, which takes into account both closing costs and interest, you can find out who has the cheapest loan overall. Your rates will also depend on how you want to pay. The rate is lower the longer the loan is.
When you find the right loan, you should start the application process right away to get the rates that were quoted. If you fill out your application online, you'll get the final paperwork in a few days. Then, you can pay off all of your debts in just a few weeks.
