Posts tagged Home Equity
Graduated Payment Mortgages

Graduated payment mortgages or GPMs let you start out with a reduced monthly payment that gradually grows to the full payment amount over time.

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Home Equity Loans for Bad Credit

Here are some of the most common questions about home equity & bad credit so you can decide whether one of these loans is right for you and your financial situation.

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What is a Growing Equity Loan?

A growing equity loan is a type of mortgage with a fixed rate where the amount paid monthly is increased over time in accordance with an agreed-upon pay schedule. This translates to more money applied to the principal of the loan, shortening its life and accruing less interest on the loan while increasing the equity in the home. Since the growing equity loan initial payment amount is higher than the monthly amount required to pay off the loan over time, the payments ensure that there would never be negative amortization of the loan.

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What are Graduated Payment Mortgages?

Graduated payment mortgages (GPMs) are a type of home loan with payments that start smaller and get larger as time goes on. These kind of mortgages have a fixed interest rate, and the payments often increase between 7-12% each year until a maximum payment amount is reached, which will continue for the rest of the life of the loan. Most GPMs are insured by the Federal Housing Administration (FHA).

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Can I Get a Home Equity Loan Online?

You can get almost anything online these days, from a cheeseburger to a cheetah (statue). But those are both objects, which are significantly easier to ship out than something intangible like a mortgage. Is it possible, in this modern age, to get a home equity loan online?

The answer, it would seem, is yes -- with some caveats.

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What is a 15-Year Home Equity Loan?

One of the benefits of owning a home is that as you pay your mortgage down, you begin to build equity. Equity is that tidy little sum that your home holds in trust for you, like a big wooden piggy bank, catching both paid-down principal and value from increasing real estate market values and inflation.

Instead of smashing through the pantry door to access it, though, you simply need to contact a banker about a home equity loan.

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What Credit Score Do You Need to Get a Home Equity Loan?

Can you get a home equity loan with a bad credit score? You’re hoping so, now. When you bought your house, the pink bathroom was cute and retro, but after living with it for years, you’re about ready to spray paint the whole thing just to get a break. But with bad credit, what are your options when it comes to renovating?

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Acceptable Credit Score for a Home Equity Loan

Home equity loans can help homeowners pay for big expenses without having to refinance their homes or take out a personal loan. Instead, the equity in your home acts like a piggy bank, allowing you to take out a separate loan for a specific purpose (or, in the case of a HELOC, establish a credit line) and repay it over a longer period of time than other types of credit generally allow. It’s an affordable option for many people, but there are guidelines for underwriting home equity loans, and credit scores are included in that mix.

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Finding Home Equity Loans with Bad Credit

When the going gets tough, sometimes, the tough get a home equity loan. There are always going to be times in life when you could use an injection of cash, whether that’s because you’re trying to breathe life into a startup, needing to update your kitchen, or you just got a little behind on bills. A home equity loan can be an excellent weapon in your life improvement war, but if your credit is on the poor side, it can make finding a home equity loan tricky.

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HELOC: Home Equity Line Of Credit in Home Loans

A Home Equity Line of Credit, also known as a HELOC, allows you to use the value you’ve built up in your home in order to secure a revolving line of credit. Individuals and families often use a HELOC to pay for serious expenses (like healthcare or college tuition) or to consolidate high-interest loans (like credit card debt).

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Home Equity Loan Terms

Home equity loans, which are sometimes known as second mortgages, allow homeowners to take out a loan against the equity in their home. Home equity loans are divided into two types. The first is a home equity loan, which is a traditional, fixed rate loan. The other is a home equity line of credit (HELOC). Since one of our other FAQs addresses the details about HELOCs, in this one, we’ll stick to talking about regular home equity loans.

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Home Equity Loans (HEL) vs. Home Equity Line of Credit (HELOC)

Home equity loans (HELs) and home equity lines of credit (HELOCs) are both ways that you can use the value in your home to pay bills, medical expenses, or to finance home improvements and renovations. While home equity loans provide a large, lump-sum payment usually in the form of a check, a HELOC simply provides access to credit based on the equity in your home. As a revolving line of credit, a HELOC functions more closely to a credit card than a traditional mortgage -- and many HELOCs actually come with one.

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What is Home Equity?

In basic terms, home equity is the amount of financial value that a homeowner has built up in their home. To discover how much home equity you have, take your property’s market value and subtract your outstanding loan balance. As you pay off your mortgage (or your home’s value increases), the amount of home equity you have increases.

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How Does a Reverse Mortgage Work?

A reverse mortgage is when a lender takes the equity in your home and converts it into payments to you. Equity in your home is defined as the difference between what your home is valued and the debt owed on the home.

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What Happens to the Equity in Your Home When You Refinance?

When you’re considering your first refinance mortgage, you’re full of questions. How much will this cost me? Is it really the right move? What even happens to my equity during this transaction? The good news is that it probably won’t cost as much as you think, but the equity in your home is affected by the type of refinance mortgage you choose.

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What is a Home Equity Loan?

A home equity loan (HEL) uses the part of the home that you own as security for a loan. For example,  if your home is valued at $300,000 and you have a $200,000 mortgage outstanding,  then you can use the $100,000 ($300,000 --$200,000) as collateral for a loan. Home equity loans are also known as equity loans and second mortgage loans.  

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Home Equity Loans (HEL) vs Home Equity Line of Credit (HELOC)

The interest on both HELs and HELOCs are lower than credit card rates as they are secured by your home, which makes them an attractive source of funds. The main differences between the home equity loans and home equity lines of credit are:

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HELOC: Home Equity Line Of Credit

A home equity line of credit (HELOC), is a pool of credit you can draw from using your home equity as collateral. Your home equity is the difference between the value of your home and the mortgage balance. So if your home is valued at $250,000 and your mortgage is $150,000 then your home equity is at $100,000 ($250,000-$150,000).  

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Home Equity in Relation to Home Loans

Home equity is value built up from paying down the mortgage of a home while it appreciates in price. It is the difference between the market price of a home and the debt attached to it like a mortgage. Home equity is the portion of your home that you actually own.

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Qualifications for Home Equity Loans

A home equity loan is a second mortgage. It uses the equity in your home as security for a loan. The low-interest rate and substantial loan amount make it an attractive source of funding for various needs. To qualify for a home equity loan generally requires you to have the following:

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Finding Home Equity Loans With Bad Credit

Home equity loans are more reliant on your home equity as security rather than on your credit score. So if you have equity in your home and bad credit you may still qualify for a home equity loan.You can get home equity loans from a vast number of lenders in the market.

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Accessing Your Home Equity

There are several ways you can access your home equity such as selling your home, doing a cash out refinance, taking out a home equity loan, or opening a home equity line of credit. Turn the equity in your home into a source of cash to use as you see fit.

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Uses For A Home Equity Loan

Whenever a large expense comes up, home equity loans are a very tempting source of funds. You can pretty much use a home equity loan for whatever you like, which is what can make it perilous for people with no control over their spending habits.

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Calculating the Value of a Home Equity Line of Credit (HELOC)

The value of a home equity line of credit (HELOC) is determined by the home equity and the lenders acceptable level of combined loan to value (CLTV). The home equity has to be large enough to cover the requested loan, and the CLTV has to be at a sustainable level

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