What place in the world is the safest and most comfortable? When you ask yourself this question, there is only one right answer that will come to mind. Your own home is the answer. But your home is about more than just safety and comfort. It also has a lot to do with your money. With a secured home equity loan, you can borrow money against the value of your home.
There are two ways to get money with a secured home equity loan: a home equity loan or a home equity line of credit. Home equity loans give you the whole loan in one lump sum, and you pay it back in fixed-rate instalments. Home equity line of credit, or HELOC, is an interesting way to borrow money because you can use it like a credit card and only pay interest on what you borrow. You can only borrow up to a certain amount with a HELOC.
Secured home equity loans are based on the amount of equity you have in your home. The more equity you have, the more you can try to get. Equity is the difference between what your house is worth on the market right now and how much you owe on it. The home is used as collateral for the loan, and you can borrow up to 125% of the home's value. When compared to credit cards and other loans, the interest rate on a secured home loan is low. You can get a tax break on the interest you pay.
Borrowers need to be aware of the following ways that lenders try to get more money from them:
- Hidden loan terms: Lenders can charge you hidden fees after the fact, so you should always read the terms and conditions before signing anything.
- Frauds: There are scam lenders on the market called "loan sharks" who try to get your attention with flashy offers but may end up costing you your home by misusing your information and documents. Always find out if the lender is real by looking at his history in the loan market.
- Equity Stripping: When you apply for a loan, the lender will tell you to "pad" your income to help get the loan approved, even if you don't make enough money to pay it back. If you don't pay your instalments, you will lose your asset. So never ask for more money than you can pay back.
Secured home equity loans give you money that you can use however you want. You can use it for business, school, health, a wedding, or to pay off debt, which makes it the most popular way to get money.
