Three Uses For Your Home Equity Loan

The home equity loan has become one of the most popular lending choices available to consumers. Remember that equity refers to the difference between what is owed in on the property and its value. If you’ve made a good investment, you could have a boatload of equity in your home but the question is how to wisely use that home equity loan.

Use #1 – Consolidate Debt

Probably the most common way to use a home equity loan is for debt consolidation. Most of the time, these loans have lower interest rates than other types of debt. For example, the average credit card interest rate is around 16%. If you are struggling to pay back all of those smaller examples of debt, you can use the funds from home equity loans to pay them all off and free up some cash. You’ll end up with a lower interest rate and a better debt to income ratio in some cases.

The biggest problem with taking this route is that if you’re the type of person who runs up a lot of debt, you may end up repeating the process once your credit cards are freed up thanks to the home equity loan. These actions could lead you down a financially disastrous road.

Use #2 – Children’s Education

If you have kids going to college, you may also consider using a home equity loan to pay for that education. College costs are increasing every year so this could be a wise choice and could help prevent your child from starting out in life with too much debt. While this is an idea worth considering, there are some drawbacks.

First, you also have to consider whether or not you’ll need to access your home’s equity during your own retirement. These two life milestones tend to go hand in hand and this might be a good time to put your own needs first, especially if your child has other funding options. Be sure that he or she explores all options, including federal grants, federal student loans, and scholarships. Another idea is for you to take out a federal PLUS loan using your home as collateral.

Use #3 – Fixing Up the Home

The second most common use for a home equity loan is repairs and improvements to the property. The basic idea is that the changes will actually improve the value of the home which means more equity. Plus, if there are major repairs needed and you can’t afford them in any other way, this is definitely a resort you can choose.

Be aware though that not all of the changes you add are going to boost the value of your home. You also need to realize that your home’s value is also closely tied to the neighborhood in which you live. If you are going to do repairs, consider focusing on the kitchens and bathrooms because these changes are the most likely to increase value.


Do you need additional good ideas on how to use the funds from a Home Equity Loan? You’ll find more ideas by visiting http://www.homemortgageloan-refinance.com/Home-Equity-Loan-Best-Deals.php.

Loan Modification (For those still current with their payments)

These days, loan modification is a popular topic. Everyone is talking about loan modification programs and most are interested to find out if loan modification is a possibility for them.

Are you wondering if loan modification is for you and if you qualify for it?

If you have suffered a hardship that has reduced your income, you very likely could qualify for a loan modification. Having a source of stable monthly income, is a huge aid in getting a loan modification. Occupying your home as a permanent residence is also another issue that can help you to get a loan modification.

Many people think that loan modification only works for those that are behind with their house payments. In fact, many people that are current with their home mortgages can benefit with mortgage modification. If you are current on your home mortgage but having a hard time keeping up with the payments, a loan modification might work for you. If your house value has dropped and you're one of the many homeowners that owe more on the house than it is worth, a loan modification might work for you. If you're having financial difficulties due to a cut in pay from your job or almost any other reason, a loan modification might work for you. If your mortgage is adjustable, modification might help by getting the mortgage changed to a fixed rate. If your mortgage is already a fixed rate, a modification could result in lowering your existing rate and thus lowering the payments too.

If you're current with your mortgage right now but worried about the next payment or if you're simply worried about the negative equity of your home, you need to find out if loan modification can help. Most lenders today only want to help those that are already late with their home mortgage payments. In fact, even if you are only ONE day late, the mortgage lender is more inclined to provide modification assistance faster than someone that is 100% current. Lenders these days are overwhelmed with applications for loan modification and they are most interested in helping those that are late and already in foreclosure.

Even if you're current right now with your home mortgage payment it might be too much to add the expense of getting an attorney to represent you with a loan modification. There is assistance available for help with loan modification. Free help programs are available and it is possible to do it yourself. The best results for loan modification will usually come from good representation by an attorney. Many things in life we can do on our own but that doesn't mean we can do them better than professionals. With loan modification, banks and lenders are willing to make the modifications and in fact they are getting incentives from the government for modifying home loans. The trouble is, when an individual goes to a lender on their own, the results are usually much less than if they had an attorney to present their case. Many homeowners in need of modification go to the lender directly and they are happy when the lender adjusts their loan and gives them a lower payment. After all, isn't that what it's all about….to get a lower house payment? Yes, it's true BUT, if the individual had hired an attorney to represent them, maybe they would have had the payment lowered for a longer length of time and they might even get some principal reduction on the loan. Most definitely an attorney can bring the best results for loan modification just as having an attorney in court usually increases your chances of success. Attorneys know the ins and outs of the lenders and they know the full benefits available. Attorneys can get better results and when you're talking about a 30 year mortgage the additional savings you can get by having proper representation can make a huge difference in the results.

Most people know that hiring an attorney is the best way for good results with loan modification. For many people, the additional cost to hire an attorney makes it prohibitive. So you say, what IS the answer? The answer to many people has become very simple.....instead of paying the home mortgage payment, they are paying the attorney to represent them. This isn't the answer for everyone but for many people this is working. It is working for people that can show that the bills they have are high in relationship to their home mortgage. At the same time, the lender needs to see that if the payment is modified that you will be able to make the new payment. When the people can't pay for the home mortgage payment AND an attorney, they are sometimes choosing to pay the attorney instead. This works because once the attorney has received the payment and the necessary documentation for loan modification, they contact the mortgage lender. Once the lender has been notified that the attorney is representing the case, the lender doesn't call about any late payment on the loan. Additionally, the lender is more responsive to the attorney in getting the modification done because they want to minimize the number of missed payments that can occur during the modification process. This means, the faster they work the faster that the loan is reinstated to current. Usually it still takes a little time and when it does, the homeowners get added benefits of missing another payment or two which gives a little financial relief right away. These missed payments are then made part of the negotiation done by the attorney for the loan modification. Find out about help for homeowners here. National Debt Solution Center


We never want to be part of your problem. NDSC will always give you the right advice so you can make the right decision about if modification could work for you. We have the solutions you need.
National Debt Solution Center

Mortgage Rates Spike Up Rapidly

Mortgage Rates spiked up this week. The 30 year rate jumped from 4.91 to 5.29. This is the highest we have seen mortgage rates all year. Last week mortgage rates moved from 4.82 to 4.91 last week. What is interesting is that in two weeks mortgage rates have moved from near all time lows (the all time low was 4.78) to the highest point of the year. The 15 year rate moved up from 4.53 to 4.79. We did not see as much movement in the arms. The 5 year arm rose from 4.82 to 4.85 and the 1 year arm moved from 4.69 to 4.81.

Two weeks ago 30 year rates and 1 and 5 year arms were all hovering around 4.8 making the arms somewhat pointless. There is no reason to get an ARM when one can get a 30 year fixed mortgage for the same rate. With the sudden rise in the 30 year rate the arms have become relevant again. I still think the 30 year mortgage product is preferable over the arms even at current rates. Although 30 year mortgage rates have risen the expectation is that they will continue to rise for the rest of the year. Below are rates for the last few weeks as well as from 6 months ago.

Jun 04, 2009

30-yr 5.29 15-yr 4.79 5-yr ARM 4.85 1-yr ARM 4.81

May 28, 2009

30-yr 4.91 15-yr 4.53 5-yr ARM 4.82 1-yr ARM 4.69

May 21, 2009

30-yr 4.82 15-yr 4.50 5-yr ARM 4.79 1-yr ARM 4.82

May 14, 2009

30-yr 4.86 15-yr 4.52 5-yr ARM 4.82 1-yr ARM 4.71

May 07, 2009

30-yr 4.84 15-yr 4.51 5-yr ARM 4.90 1-yr ARM 4.78

Dec 04, 2008

30-yr 5.53 15-yr 5.33 5-yr ARM 5.77 1-yr ARM 5.02

In addition to mortgage rates we also like to look at mortgage payments. Using our mortgage calculator we translated today's mortgage rates into a monthly payment on a 200k loan. We did the same thing with rates from last week and rates from December 4, 2008 (6 months ago).

Jun 04

30-yr $1109.36

15-yr $1559.79

5-yr ARM $1055.38

1-yr ARM $1050.53

May 28

30-yr $1062.66

15-yr $1533.05

5-yr ARM $1051.74

1-yr ARM $1036.07

Dec 04

30-yr $1139.34

15-yr $1616.18

5-yr ARM $1169.68

1-yr ARM $1076.08

Usually there is not too much difference from week to week. That is not true this week. The payment on a 200k loan has risen 46.7 or about 4.4 percent. Payments are down 2.63 percent from what they would have been 6 months ago.

So what is our advice to people looking for a home? Unfortunately I think mortgage rates will continue to rise so it's probably best to lock in rates now. Second although arms are a viable option I would still take the 30 year rate over the 1 or 5 year arm. There are some expectations this recent rise is just the tip of the iceberg and we could see rates above 12 percent before this is over with.


Ki maintains a website about Austin Texas. His site also provides information on mortgage rates along with a free mortgage calculator.