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california home loans refinance refinan
Types of Home Equity Loans
Home equity loans are a way of using the money that you've invested in your mortgage by borrowing against it. Essentially, a home equity loan is a 'second mortgage' - a loan secured by your property. If you don't make good on your payments, the lending company or bank can force the sale of your house to recover their money.There are two major types of home equity loans - home equity loans and home equity lines of credit, also called HELOCs. Most lenders that offer home equity loans offer both kinds. A home equity loan for $10,000 and a home equity line of credit for $10,000 are two completely different animals though they have a lot of similar features.
Home Equity Loan
If you apply for and are granted a home equity loan for $10,000 at 7% APR for 15 years, you will receive a check or a deposit to your bank account of $10,000. That is the full amount of the loan that you can ever draw on that particular application. Depending on the terms agreed upon, you may have one to several months before you have to begin repaying the loan. You'll pay a fixed amount every month until the full amount of the loan and the interest charge is paid off. You'll know from the very start how much you'll be repaying.
Home Equity Line of Credit
A home equity line of credit - a HELOC - is much more like a credit card. When you apply for and are granted a home equity line of credit, the bank establishes a 'line of credit' - which functions just the way that a 'credit limit' does on your credit card. You may receive special checks or a plastic card with which to access your line of credit - but you don't receive the full amount at one time.
In fact, you don't have to take any of it immediately. You can draw on the line of credit at any time, up to the full amount of the line of credit throughout the agreed-upon life of the loan. Suppose that you're doing some home repairs. You can use your home equity line of credit to pay for $2,000 worth of roofing tiles. That leaves you $8,000 in your line of credit. Three weeks later, you can use your line of credit to pay for $4,500 worth of windows - and still have $3,500 left that you can borrow against.
If you then start paying back on your home equity line of credit, that money becomes available to you again. If you pay back $1,000 of what you've borrowed, you now have $4,500 on your line of credit.
A home equity line of credit has two 'phases' - there is the draw period, during which time you can draw against the credit limit as long as you stay below the limit. During that time, you can elect to only pay the interest that accrues - or you can make payments on the principal to free it up. Once the draw period is over, you go into the repayment period. During the repayment period, you can't draw against the line of credit any longer, and must make full repayment.
About the Author
Joseph Kenny is the webmaster of the loan information sites http://www.selectloans.co.uk/ and also http://www.ukpersonalloanstore.co.uk.
More Useful Resource and Updates on california home loans refinance refinan
- Bernanke calls for more help to fix home mortgage crisis (The Sacramento Bee)
WASHINGTON ? Adding to a mounting chorus in the nation's capital that the Bush administration must do more to reverse the nationwide housing slump, Federal Reserve Chairman Ben Bernanke on Thursday spelled out several aggressive steps that government could take to fix the main cause of the recession. "Despite good-faith efforts by both the private and public sectors, the foreclosure rate ...
- Are sweeping changes coming for mortgage finance? (Merced Sun-Star)
WASHINGTON - Adding to a mounting chorus in the nation's capital that the Bush administration must do more to reverse the nationwide housing slump, Federal Reserve Chairman Ben Bernanke on Thursday spelled out several aggressive steps that government could take to fix the main cause of the recession.
- Proposal could drop mortgage rates to 4.5 percent (The Monterey County Herald)
Mortgage brokers could barely contain their enthusiasm as news leaked from Washington of a proposal to reignite the dormant housing market by driving down mortgage rates to the 4.5 percent range.
- Mortgage Refinance Applications Soar As Rates Fall (Nasdaq)
NEW YORK -(Dow Jones)- Applications to refinance mortgages soared last week as interest rates dipped by almost 1 percentage point after the Federal Reserve announced that it would purchase billions in mortgage related debt.
- Rate drops are of little help to many in California (Los Angeles Times)
They've fallen to about 5.5%, but restrictions on Fannie and Freddie leave those with jumbo loans or who owe more than their homes' values to face much higher costs. Home loan rates are near their lows for the year, reflecting optimism over government efforts to help the housing markets, but analysts see little help for the worst-off borrowers and people with jumbo mortgages.
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