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Home Equity Broker Resource
Many loan brokers and lenders are excited about the new trend with home equity loans. According to Nationwide Mortgage Loans, "current, key market conditions point to home-equity lending to meet the needs of homeowners." Second mortgage brokers who learn to sell the benefits of home equity financing with their customer base will go far. If brokers can learn to assess the financial needs of their clients then they will fund many loans with the same customers over the years.
Don't forget, over the last few years homeowners across the nation, refinanced their homes with record low rates. So borrowers don't want to refinance to get cash because their rates are already so low.
Understanding Home Equity
Home equity loans offer a fixed-rate lump-sum where the loan is applied to a specific need and interest accrues on the entire loan.
The other type of second mortgage has become a very popular option where homeowners secure available home equity for use now or later. With home equity lines, people only pay interest on the amount tapped, so they don't pay interest on funds they haven't used.
A recent article in The Wall Street Journal states: "Interest only mortgages can make sense for borrowers whose incomes fluctuate and those who are stretching to afford a more expensive home, & these mortgages also can be a good choice for borrowers who expect their income to jump in coming years, making it easier to handle any increase in monthly payments.
In 2004 U.S. Census Bureau, states that 69% of U.S. households own their homes. This is the largest percentage of homeownership. A study from the Joint Center for Housing Studies at Harvard University states that "despite a brief cyclical slowdown following the 2001 recession, 1.3 million net new households have formed each year on average since the start of the decade. Bolstered by strong immigration during the 1990s, household growth has been set upon a higher path that is likely to continue over the next 10 years." Using this information, it's clear household creation will be a factor that continues to drive growth in homeownership.
Additionally, the Harvard study reports that "unlike stock wealth, aggregate home equity has moved up steadily for the past 40 years with only brief, shallow dips. Housing wealth is also more broadly based than stock wealth. Indeed, with the strong growth of home equity, homeownership has now reasserted itself as the cornerstone of household wealth." There is money in homeownership, and borrowers have recognized the opportunity to leverage their equity in several ways.
Home equity loans are usually secured for debt consolidation, home improvements, and education.. The latest financing trend has people getting home equity lines of credit as safety net sources for future endeavors and emergencies.
Brokers who care about managing their customer base effectively must commit themselves to educating themselves and their cliental on home equity products that offer so many benefits.
For more information, please visit: securedfunding.com & online.wsj.com/public/us
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