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Getting Cash Out
By Lynda Nelms
Home equity loans can be your best friend, when you find yourself in a pinch for cash and don't want to refinance your entire mortgage. These cash out equity loans are considered second mortgages that are held in second position on the property title. In the past home equity loans have increased in popularity with homeowners during periods in which the Federal Reserve is hiking key interest rates.
According to several large home equity lenders, the secondary loan volume increases when interest rates climb, because homeowners don't want to refinance the first mortgage lien. Senior loan officer, Brendon Daly said, "People don't want to pay higher interest rates on their 1st mortgage to just get a $50,000 in cash, when they can get a home equity line that doesn't charge any interest until the funds are accessed. Daly continued, If a borrower has a $650,000 first mortgage that has a fixed rate under six percent, why on earth would they want to refinance just to get a little cash." As Brendon demonstrated, there are many opportunities and good reasons to take out a home equity loan.
6 Benefits to getting cash out using your home equity with a second mortgage:
- Cash for Financing Home Improvement Projects
- Consolidate Credit Cards and with Fixed Rate Loans
- Down-Payment Funds for Investment Home Purchase
- Cash Lines of Credit for Reserves
- Tax Deductibility with Second Mortgage Interest
- Lower Monthly Payments from Debt Consolidation
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