Tips on Home Equity LoansPosted by Nick Niesen on October 29th, 2010 Offers for home equity loans are widely advertised. Lending institutions make it a point to highlight the advantages any potential borrower shall have in getting this kind of loan. One reason for the aggressive offer is that, with the home equity as collateral, this kind of loan is safer business for the lender than the credit cards. The aggressive campaign sometimes makes the potential borrower think only of what are highlighted and forget, to their regret later, the so-called fine print in the loan terms. In putting the house at risk, the owner-borrowers owe it to themselves and the family members to make sure they are making a decision they can handle. The biggest risk of a borrower is the lack of understanding of the loan terms. Here are some of the information any borrower should take time to be well versed of: Tips to the Borrower: * Have a clear idea of the reason for the loan. Is it a one-time or ongoing financial need? This is needed to decide if the loan should be Fixed Rate or HELOC (Home Equity Line of Credit). Be sure to choose the appropriate loan package. The home equity loan is an excellent and tempting source of cash for the home owner. The lenders consider it a safe investment but the opposite applies to the home owner. Yes, there are advantages like the tax-deductible, lower-than-the-credit card interest and the convenience since you can apply on line and agents are eager to do business. However, the collateral?s value is more than what the appraiser reports. The appraiser has no idea of the true value of a home. If ever a home owner finally decides to have that home equity loan, it should only come after a careful study of the pros and cons of the decision. Like it? Share it!More by this author |