Would You Care To Elaborate?
Of course. First and foremost, I will explain in a few lines what this loan type entails. If you apply for a home equity loan or line of credit, you are taking out in cash the equity left on your home, which is the difference between the real market value of the property and the remaining mortgage balance. This is a secured loan, naturally, and it works more or less like a regular mortgage loan (it is usually referred to as "second mortgage").
Okay… Now What?
You might be wondering whether this amazing financial product holds any restrictions when it comes to the purpose of the money. It does not! What you do with the equity loan is completely up to you. You can buy a car, buy a second or third property, put your kid through college, pay outstanding bills, or whatever you can think of.
Did You Say Home Improvement?
Home improvement is one of the many uses home equity loans have. And also one of the most popular ones. Why is that? Leaving aside the loan's evident advantages, there are many other benefits which are rarely discussed and which can really come in handy if your home needs renovations. Why do people seek to improve their house? There can be many different answers to this question, but the one we want you to focus on when reading this article, is this one: improving the quality of your home will increase the equity value on it. This is essential for future selling or renting.
The interest rate on home equity loans in very low. It will be lower than on most home improvement loans you will find out there, and what is more, it is tax deductible. So not only will you be renovating your property on excellent loan terms, but you will also be saving thousands on interest!
Provided that you research the net thoroughly, you will be able to find lenders willing to lend you 100% of your home value. They are hard to find, but extremely worth the try. They usually offer equity loans specially tailored for improving your home. The purpose of the loan is limited to this deed.
In case you are not exactly sure of how much your project will be worth overall, and you do not wish to take out an unnecessary sum of money, home equity lines of credit are precisely what you should be looking for. They allow you to withdraw as much cash as you need, there is a limit which is set by the lender and which can be negotiated upon the signing of the loan contract. Once you repay the sum you withdrew, you will be able to take out more. You will be able to say goodbye to cash flow problems!