So what is home equity? Quite simply it is the difference between what you still owe on your home and its appraised value, and what your home is worth. A home equity line of credit works a little differently. You still are able to borrow a specific amount of money based on the equity in your home, but the money is not paid out in a lump sum. It is important to remember that just like any other loan you will be paying interest on any money you use out of your credit line. When you are looking to do a home equity refinance loan you must realize that you are using your home as the collateral in order to get the loan. You are guaranteeing your ability to repay the loan against the value of you home. If for any reason you cannot make your payments the lender has every legal right to foreclose on your home so they can sell it to cover the value of the loan. One of the best reasons to do a refinance your current home equity loan is to get a lower interest rate. If your original loan had a high interest rate you can save quite a bit of money if you are able to obtain a lower rate. If you are thinking of doing a home equity refinance then do some research and get at least four quotes from reputable lenders to see which package may work best for you.
Monday, May 18, 2009
What is home equity?
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