| Home equity loans are great for home improvements, | | | | afford an additional monthly payment. |
| paying off credit card debts, and paying for a child's | | | | Getting the Best Home Equity Loan |
| education. Many homeowners choose to take out a | | | | Home equity loans are often confused with refinancing. |
| home equity loan because the process is quicker and | | | | However, the two processes are very different. |
| cheaper than refinancing their home. For the most part, | | | | Refinancing a home creates a new mortgage, thus |
| money is received within five days and the fees | | | | homeowners must go through a process similar to |
| associated with the loan are minimal. | | | | obtaining an original mortgage. The process is lengthy |
| What is a Home Equity Loan? | | | | and expensive. Home equity loans are much easier |
| Home equity loans are essentially second mortgages. | | | | because the home's equity serves as the collateral. |
| These loans allow homeowners to borrow money | | | | Comparing Rates |
| using their home's equity as collateral. For example, if a | | | | When trying to locate the best home equity loan, |
| home is currently worth $200,000 and the amount | | | | homeowners should compare rates and services from |
| owed to the lender is $150,000, the home's equity is | | | | several different lenders. Eager applicants foolishly |
| $50,000. Thus, the homeowner has the opportunity to | | | | accept the first quote received. However, |
| borrow up to $50,000. A second loan is created, and | | | | homeowners may be given better offers by shopping |
| the homeowner makes two monthly payments. One | | | | around. Initially, homeowners could contact their current |
| payment is applied toward the original mortgage and | | | | mortgage company. If payment history is satisfactory, |
| the second payment is applied to the second | | | | these lenders may be able offer a lower rate. |
| mortgage. | | | | Nonetheless, homeowners should compare rates from |
| Although interest rates are low, rates for second | | | | other lenders. Submitting an application through an |
| mortgages are higher than rates for an original | | | | online broker is beneficial because these companies |
| mortgage. In some instances, lenders consider home | | | | negotiate with a number of lenders. Through brokers, |
| equity loans riskier. Before taking out a home equity | | | | homeowners will receive multiple offers or quotes |
| loan, homeowners should consider whether they can | | | | from several lenders within 24 hours. |