Home Equity Loan Risks

Home equity loans give individuals a tool to extend their existing credit line by securing debt on the equity value of their existing homes. This access to easy and cheap money can lure the borrower into securing a debt for reasons which otherwise could have been funded through wise money management.

Following are some home equity loans risks:

Risk of losing one's home:

The biggest risk involved in home equity loans is that of the borrower being rendered homeless. In the case of the borrower being unable to make timely payments of the interest and the principal, the lender can claim the existing house of the borrower. Thus a default in payment can lead to the loss of the home, which is used as collateral for the loan.

Hidden loan conditions:

Consumers who do not pay careful heed to the fine print may fall prey to the intrinsic conditions of the home equity loan, particularly those pertaining to principal and interest payments. For example, a balloon payment of the principal may add to the debt burden of the borrower and the inability to make the payment may result in foreclosure and thus loss of the borrower's house. The lender may also impose legal and procedural fees later on in the term of the loan, which may affect the actual amount payable by the consumer.

Higher interest payments:

If the equity loan is financed at a floating or variable rate, then it is subject to changes depending on the interest rate scenario in the economy. This may be because the interest payments fluctuate out of the bounds of the borrower's reach.

Besides these major risks, the home on which the loan is secured cannot be leased during the term of the loan. The loan on home equity will also effectively increase the time required to pay off the debt on the existing home.

Many times, the easy availability of an equity loan can tempt a consumer to take the loan for day-to-day expenses, which actually add to his existing debt burden.

The investment made by the money raised through raising an equity loan should be financially more rewarding than the interest paid on the loan.

All these factors should hence be taken into consideration before taking a home equity loan.

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Refinance Mortgage Loan A Smart Move For Many Homeowners

The best scenario to consider a mortgage refinancing loan is when you owe quite a large amount and you still have many years of paying off your home loan. Its a good idea to consult a broker or a mortgage officer regarding the new interest rate's influence on your monthly payments. You may also want to know the length of time for you to recoup the new loan's closing cost. However, to give you an idea of when it makes sense to do a mortgage refinance loan, here are some of the instances.

Getting a refinance mortgage loan can be a smart move for many homeowners. This is especially true if the interest rates are low. In the world of finance, interest rates directly affect the way mortgage rates behave. So if the interest rates are low, then mortgage rates will also be low. Low mortgage rates in turn lead to bigger savings from your monthly payments.

4 Tips On How To Refinance A Mortgage Loan

1. Make sure that the drop in interest rates is enough to make a refinance mortgage loan worthwhile.

2. To determine if refinancing your mortgage loan will save you money, compare the total costs to refinance, as well as interest rates.

3. Generally, the lower the interest rate, the more points the lending institution will charge.

4. A lower interest rate gives you less interest to deduct on your income tax, which may increase your tax payments and decrease your total savings from refinancing.

What Will It Cost To Refinance A Mortgage Loan?

A refinance mortgage loan generally means paying off your original mortgage by signing a new loan. Your refinance mortgage loan acts like your typical mortgage loan. That means that you pay most of the same costs you paid to get your original mortgage. Having said that, the total expense of a refinance mortgage loan depends on all those factors interest rate, number of points, and other costs. Lenders will charge several points in order to offer you the lowest rates.

4 Reasons You May Consider A Mortgage Refinancing Loan

1. Dropping of rates - Usually, when rates drop by 1% to 2% mortgage refinancing can be one good option.

2. Consolidation of debts - Through mortgage refinancing, consolidating your debts into one payment is viable if you have equity in your home.

3. Staying in your home for an extended period of time -The lower interest rate for refinancing can be best enjoyed if you are to stay in your home at least 5 years.

4. Reducing the mortgage term - Larger monthly payments will enable you to pay your loan quicker. Since shorter term programs have lower interest rates, surely, you'll be able to save more with this kind of refinancing.

Here are 4 terms to look into to help get the best refinance mortgage loan.

1. Loan size

2. Paid points

3. When is the closure of the loan?

4. Locked or floating rate

Shopping around is one of the best things you can do with any kind of refinance mortgage loan. Know the credibility of your choice lenders. Allow ample time for you to get the hang of all the refinance mortgage loan terms if you're a newbie on this industry. Doing your homework will save you not just some money but also from future headaches.

Dean Shainin is a consultant specializing in home loans, strategies for loan financing, home equity loans, and consolidation loan information. To see a list of recommended loan companies, tools, resources, free quotes and articles, visit this site: http://www.homemortgageloantips.com

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The Basics of Home Equity Loans

There are many kinds of loans that can be availed today. If you are a person that needs cash but you don't actually have it at the moment, you may think if taking advantage of home equity loans. This kind of loan may serve as your means of getting out of the current problem that you have. People apply for a loan because they need to spend money at the moment but they don't have it yet. Thus, lending companies can give them their needed money and allot time for the individual to pay the loan amount plus the interest. Generally, an individual may use his house as the collateral for him to make a loan, and this is called home equity loans. There are many benefits that can be experienced through this kind of loan; however, one should not forget that there are more things that must be learned before entering any kind of deal.

Home equity loans are also called the second mortgage since an individual will be granted a loan with the use of the home as the main collateral. This is used today so that more people will be able to have their money to pay for home improvements, tuition, medical and other types of expenses. Also, this kind of loan is chosen by many people because with home equity loans, you can borrow a big amount of money while you can remove the interest as you submit tax returns. Thus, this may seem to offer more benefits than other types of loans. But as this may have many benefits, it also shares a number of pitfalls for an individual. You must learn how the home equity loans work so that you will be able to know how to use it the right way.

There are two kinds of home equity loans. You must know the difference of the two so that you will be able to know which type of loan may be able to meet your needs and which type can offer you the amount of your needed money without soaring interest. The two types of home equity loans are the fixed rate loans, and the home-equity line of credit. In a fixed rate loan, the amount that the individual pays for the entire period is the same as well as the interest rate. However, with a home equity line of credit, there is a changing interest rate that must be paid. There are some circumstances that a fixed rate loan is better while there are other situations that a home equity line of credit is more desired. You have to compare the terms of the two home equity loans so that you can choose the one that has better offer for you considering the situation that you are in.

Having home equity loans is a big help if you need cash. You will be able to get it instantly and this is one of the most important benefits. However, for you to get more benefits from home equity loans, you must be sure that your situation asks for the loan and that you will be able to pay for the loan as it would be due. You should know how the loan can work for you and avoid the situations that may only lead to additional debt in your part.

What Everybody Ought to Know about Home Equity Loans Rates: The tips, the benefits all the "how to" guides.

Adjustable Mortgage Rates

Adjustable mortgage rates are an option, which allows borrowers to go for a higher mortgage amount. If a borrower anticipates that the overall income of the household will rise, then this is a good option to follow. Further, if a homebuyer believes that the property bought will be sold in the next five years or so, adjustable mortgage rates are an ideal choice.

The major advanatage with adjustable mortgage rates is that, if the mortgage was taken at a particular rate and then the rates fall, the payments will automatically be recalculated as per the new, lower rates. If the rates go up, the mortgage rates will also go up. The rates offered at the start of the mortgage are generally lower than the prevailing market rates at the time. This means, the first adjustment in the rates, during the life of the loan can alter the monthly payments considerably.

Adjustable mortgage rates usually have a cap, which puts a limit on the maximum amount a rate can change to, at one time. It also defines the maximum amount, it can vary from the original rate, over the life of the loan. Some adjustable mortgage rates also use the option of having a payment cap, that specifies the maximum amount the payment can go for, during the loan term. This limit is specified in dollar amounts and not as a percentage rate.

A few adjustable mortgage rates have an option known as the conversion option, which enables the borowers to convert the adjustable rate mortgage to a fixed rate mortgage, in the future for a certain specific charge. This is a good option to select, at the time of taking the loan as it allows to take advantage of loan rates going down.

Adjustable-rate mortgages are the next most popular type of mortgage rate options available. Adjustable mortgage rates vary according to various economic factors. Therefore, the monthly payment of the mortgage will go up or down, throughout the term of the loan.

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How the Tax Break from Car Donations Works

Have a car or a truck that you want out of your garage? Want to get that heart warming feeling of having helped the needy? And last but not the least, want to pay less in taxes this year? Well, you can do all three at the same time! Just go ahead and donate that old car to a charity.

The charity can then go ahead and do any thing with the automobile sell it, use it for not for profit activities or even give it away to a needy individual. Whatever it does with the car, it has to be in accordance with the norms laid down by the IRS to benefit you (in terms of taxes). The organization has to justify the sale or re-donation of the donated vehicle. The donor has to be forwarded complete details about what the charity ultimately did with the car. This documentation has to reach the donor within 30 days of the donation being made. Thereafter the donor can submit the papers to IRS and claim a tax break.

Though this might look quite exciting, there are some ground rules that one has to keep in mind. First and foremost there is a threshold value of $500 set by IRS. What this means is that barring few exceptional cases, taxpayer can deduct no more than this amount from his taxable income even if the fair value of the car is higher. However, if the charity manages to sell the car at a price which is higher than the threshold price, all that the donor has to do is collect documents from the charity giving all the details and submit same to IRS and avail a higher deduction.

The $500 rule also states that if the fair price of the automobile is higher than the set threshold value but the charity manages to sell it at a price lower than $500, the taxpayer still gets to deduct $500 from his taxable income.

What happens if the fair price of the donated automobile is less than $500? In this case the taxpayer gets to deduct only the fair price amount from his taxable income.

What if the charity does not sell the donated vehicle within the stipulated 30 days and decides to use the same for humanitarian or public service activities for a couple of months and later decides to sell the car at a price that is higher than the threshold price? Here the donor can actually claim deduction at the fair market value as long as the charity is able to provide the donor with relevant documents pertaining to the selling price as well as how the auto was used for nonprofit works before the sale.

So, if you have a station wagon lying unused and unwanted in your garage after you bought your new shiny wheels, go ahead and donate it. Just make sure to follow the rules when you claim the tax deduction!

Brad Davis recommends that you visit http://www.specialkidsfund.org/donate_a_car.htm for more information on car donations.

Maine Mortgage Loan Brokers

The state of Maine is a big and confusing and often can be a marketplace for Maine mortgage loans and it could be quite overwhelming to go out on your own without professional financial help. The sensible thing to do is to hire a Maine mortgage loan broker to help you with your needs.

Because it is the Maine mortgage loan broker's job to find the lowest mortgage rates and are often experts on the details of the business, they are the most suitable people to hire if you are planning on a acquiring a Maine mortgage loan. Over eighty five percent of Maine mortgage loans are transacted by mortgage mortgage brokers working for consumers. Because of their vast experience, they have the ability to exhaust all options to find the most appropriate mortgage for you.

When you are looking for a Maine mortgage loan broker, one characteristic that you should look for is truthfulness largely because it deals with money. Your Maine broker should stay true to their word and should meet all promises made to you. Always try to read the fine print before contracting with any broker. Try to also make sure that your broker has your best interest in mind and does not force programs or other deals onto you that you do not really need. A suitable broker will assest you in your financial circumstances and put you in a proper program. It may also be in your best interest to compare rates of other brokers and find out if their fees are rational.

Fees can differ widely depending on terms, rate of the loan, conditions and more. Most banks and brokers also may profit in several ways. It could often be categorized into three catergories: front end fees, back end rate and the combination of the two of them. Simply put, some brokers charge at the start of the mortgage loan, sometimes commission basis, and some do both. It is in your best interest to be clear about all terms and fees before hiring a broker for a Maine mortgage loan.

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