Christian Refinancing Home Equity Loan
In a money crunch, a Christian refinancing home equity loan could free up some much needed cash to pay off bills or meet emergency financial needs. The amount of equity is determined by appraising the current market value of property, or the price the house would bring if sold today, minus the remaining mortgage balance. In essence, if a seller sold at a profit, the bank would take its share of the asking price, which the seller currently owes on the property; and the seller would pocket the profit. That potential net profit is home equity. Homeowners borrow against the interest in their house, which is used as collateral. A refinancing home equity loan is a second mortgage which replaces the first note with a new monthly payment, ideally at a lower interest rate and with more manageable terms. Many homeowners refinance when rates go down in order to save money on mortgage payments. Borrowing against home equity is also a good way to get extra cash to pay off debt. Owners may want to consolidate and clean up several accounts in order to maximize savings or put money back into the family budget.
Borrowers may choose a refinancing home equity loan which pays out a lump sum at a fixed interest rate, or as a line of credit; and there are advantages to both. With a lump sum, also called a closed end home equity loan, borrowers receive a one-time payment based on the amount of equity, which is usually repaid within 15 to 20 years. For families with several big-ticket financial obligations, a lump sum can go a long way. Parents can finance the kids' college education, pay off car loans, or plan for retirement. A large one-time windfall can afford financial security. A great idea would be to take some cash and invest it into several high-yield short term vehicles. Certificates of deposit, or CDs, money market accounts, stocks and bonds, or liquid assets such as gold and other precious metals, will only accrue interest and increase in value. Obtaining a refinancing home equity loan could be the answer for an uncertain economic future. Instead of relying totally on Social Security to fund retirement, smart homeowners can sock a substantial sum of money away for the golden years, purchase mutual funds, or set up a trust for dependent children or grandchildren.
An open end loan acts as a revolving line of credit; and when a need arises, money is available to be withdrawn or borrowed in smaller increments. Loans are limited up to the total amount of equity over a period of time up to 30 years, but at fluctuating interest rates based on the prime rate, plus margin. Borrowers agree to a minimum monthly note, which may include interest-only payments to keep the line of credit open. The advantages to having a refinancing home equity loan with an open ended line of credit is easy access to funds as needs change and lower interest-only monthly payments. A revolving line of credit is like having a rich uncle who doesn't mind loaning money periodically when you run a little short.
Repaying a refinancing home equity loan should not have to hurt. If taking out a line of credit causes more money woes, then it would be best to forego the temptation. "The blessings of the Lord, it maketh rich, and He addeth no sorrow with it" (Proverbs 10:22). For some consumers, a disadvantage to revolving accounts is easy access to cash. The temptation to come to the well too often could result in a source of water that one day runs dry. Unless consumers exercise discipline and restraint, ready access to cash could cause indebtedness overnight. Borrowers should also watch out for fluctuating interest rates. Some lenders promise the moon, but only deliver star dust. Consumers should not let the dream of instant cash at high interest rates, which are subject to change with economic winds, distort sound financial planning. A second house note with an adjustable rate mortgage which allows the lender to decrease or increase rates at will is risky. Borrowers should make sure to clarify all terms with lenders before leaping headlong into new arrangements.
Before jumping into a second mortgage, borrowers should consider the consequences from every possible angle. The decision to borrow a refinancing home equity loan should be based on: (1) How much the property appraises for on the current market; (2) the amount remaining on the first mortgage; (3) a comparison of interest rates for the first and proposed second notes; and (4) the amount of time in which first and second notes have to be repaid. If the property's appraisal is less than the balance owed on the first mortgage, forget about borrowing equity, because there is none! If there are only fifteen years left on the first note and payments are not super high, there may be no reason to incur additional debt when owners are so close to having a clear deed. And if interest rates for a second mortgage are three to five percentage points less the current payment, the difference may not be significant enough to warrant getting a refinancing home equity loan. On the other hand, if the interest rate for a second note is eight to ten percentage points less, then owners may need to take a trip to the bank. Lastly, owners should carefully examine terms for both options. If the first note is for thirty years, and the second is for fifteen, it makes perfect sense to use the secondary financing to pay off a longer term obligation, only if the new payments are smaller and more manageable.
Christian Home Equity Loan ComparisonsA home equity loan comparison takes different options and compares them for the best available type to fit a certain borrower's needs and offers the best interest rates. Comparisons can be made with several lenders or mortgage brokerage offices, or can be done completely online. Using the online method for home equity loan comparisons is typically the fastest and most effective way to gather information from multiple sources. Choosing the right program for a borrower is the most important reason for seeking help with comparing terms, fees, rates, and lenders.
Key features to consider will include whether or not to choose a fixed rate loan, a line of credit, or a combination of both. A home equity loan comparison between loans and lines of credit are distinct. The loan program is one lump sum; usually at a fixed interest rate, based on the amount of equity a borrower has available in their home. A line of credit allows the borrower to get money as they need it. There is usually a low interest rate to start, and then a variable monthly rate based on the outstanding balance. Making home equity loan comparisons between the above two options is determined by the purpose for needing the money.
There is also the option of combining these two options with the first mortgage to have only one monthly payment. This can be done in order to avoid paying PMI or Private Mortgage Insurance, and can also be used for a down payment. Home equity loan comparisons with lines of credit should also consider the tax benefits or disadvantages. A home equity loan comparison should be done before submitting an application to any lender. Each lender checks the borrowers credit history once an application has been made. Credit checks by multiple lenders will lower the borrower's credit score, thus allowing an inaccurate comparison.
For the most accurate information to be received, a borrower must be sure to know their credit score. This information can be obtained by contacting any or all of the three nationally recognized credit reporting agencies. These agencies will allow the borrower to receive their own credit report without deducting any points from the all important score. Making a home equity loan comparison with this score in hand will better equip the borrower for receiving accurate rate quotes since interest rates are determined by a credit score. The higher the scores are, the lower the rate. The lower the score is, the higher the rate. Making accurate home equity loan comparisons is the first step in deciding which type of assistance and which lender to choose. "Be not ye therefore like unto them: for your Father knoweth what things ye have need of, before ye ask him" (Matthew 6:8). When nothing else seems to work, asking God for guidance can allow anyone to find answers.
Home equity loan refinancing is using the investment established in a current mortgage as collateral to obtain revolving credit or cash. It usually has a fixed interest rate and a fixed term. Documentation needed to fill out the application online will include income verification using pay stubs and tax returns. Current mortgage holder information will be needed to apply for equity loans refinancing. Estimate the value of the home and acquire homeowner insurance information including policy number. Acquiring all needed information, understanding the current industry, and knowing the personal financial situation are the three most important keys to success in refinancing.
A home equity loan refinancing line of credit will allow a person to consolidate bills, make home improvements or pay for other expenses. Interest will be much less than most high interest credit card debt. A home equity line of credit works like a revolving charge account. The available credit is accessible all the time and will be accepted anywhere that accepts credit cards. Let the investment in a home help save money by paying off high interest accounts and using cash for much needed expenses. Consider cash uses for college expenses or home improvements. "If ye endure chastening, God dealeth with you as with sons; for what son is he whom the father chasteneth not?" (Hebrews 12:7).
This type of financing usually means a lower interest rate, which in turn will mean a lower monthly payment and a savings in overall interest and payoff time. Considering equity loans refinancing can also allow one to turn an adjustable rate mortgage to a fixed rate mortgage. This means no more interest rate increases and monthly payment increases. Using the equity in the home can bring credit scores up. By consolidating debt those late payments cease and calls from creditors cease. With those high interest debts gone and a lower monthly mortgage payment the stress caused by debt will be gone.
Christian lenders may want to have the house appraised before approving any type of financing. This is something to check into before seeking out equity loans refinancing and can help in determining just how much of an investment there actually is in the home. Take into consideration fees, down payment and any closing costs involved in refinancing. Some lenders may be able to roll fees, closing costs and down payment into home equity loan refinancing. Lenders should provide the borrower with a good faith estimate within three days of completing a loan application.