| A 125% home equity loan is sometimes also called a | | | | Even in this case; this loan is cheaper than the interest |
| second mortgage, since most borrowers take it on the | | | | rate of consumer loans like credit cards and credit |
| top of the first mortgage. It is a loan in which the | | | | lines. |
| borrower pledges his home as collateral for a part of | | | | If you apply for a 125% home equity loan watch |
| the loan, and his income assures the repayment of the | | | | carefully the small print. The terms of some loans are |
| rest. The lender will have a lien upon your home. As in | | | | simply outrageous. This is done by some lenders, so |
| the case of any mortgage, you'll have to pay this lien | | | | that the loan will go into default and the real estate |
| before you can sell the property. | | | | property into foreclosure. Even if you are desperate |
| If applied responsibly, it can be an excellent tool to | | | | for cash, don't jump into the first deal that you can |
| overcome a financial narrow path. You can | | | | close. Only choose an established mortgage company |
| consolidate different forms of debt into only one. This | | | | that you can trust. Even if not every lender offers |
| implies only one bill at the end of the month. Even if this | | | | 125% home equity loans, there are still many that do. |
| bill is bigger, it is easier to have your peace of mind. It is | | | | These lenders are competing for new clients and are |
| also easier to renegotiate the contract of your debt. | | | | in a position of offering you descent conditions. |
| This kind of loan is also often used by first time buyers | | | | Also ask yourself if you really need 125% of your |
| who want to renovate a property before they move | | | | home value. There are not many situations when this |
| in. Renovating a home can be necessary and it will | | | | is needed. The example above, about the necessity of |
| increase the worth of the home. Therefore it | | | | renovating, is a good one. |
| guarantees the lender that its loan is well secured | | | | Additionally in case of necessity, to pay a medical bill |
| against default. | | | | for example or student loan that cannot wait, putting a |
| However, many lenders see 125% home equity loans | | | | lien of 125% upon your home can be advisable. |
| as a higher risk and don't offer this sort of financial | | | | However, all care should be taken, if you are putting |
| instrument at all. Lenders that do offer 125% home | | | | such a high burden on your home because you want |
| equity loans will charge a higher interest rate on the | | | | to go on vacation or buy a car. Only use your home |
| loan, compared to the prime rate of a first mortgage. | | | | equity as needed, since it is your home. |