Equity Loans to 125%
Debt Consolidation Solutions for Homeowners
By Amber Smith

Consumers can get credible advice for debt consolidation, second mortgage and home equity loans from the 125% loan experts at Nationwide. Consolidating compounding interest into a fixed rate tax deductible loan is one of the smartest financial decisions you can make if you have existing credit card debt. In the last year, high LTV loan programs like the 125% second mortgage have endured many guide line changes and with 680 credit scores required the tightening has happened. Read and learn more about smart and cost-effective ways to refinance your debt.

Have you ever wished that you could get more than you home is worth through a 2nd mortgage? Well, you can. It's called a home equity loan to 125% loan. When you choose to obtain a home equity loan to 125%, you will receive a loan in the amount of 125% of your home's worth. You can use the extra money to pay off bills consolidate debt.

Usually, home equity rates are based on the Wall Street Journal Prime Rate as are Home Equity Lines of Credit to 125%. You can find this rate in the Money Rates section of the Wall Street Journal. In order to get this number, they keep tabs on the 30 largest banks, and when three-fourths of those banks change their interest rates, the Wall Street Journal publishes the new rate.

Sometimes, banks and lending agencies will work off different rates including the LIBOR Index, MTA Index, and Federal Reserve.

Learn how to consolidate credit card debt with a tax deductible home equity loan!

For years, Alan Greenspan has been chairman of the Federal Reserve, controlling interest rates and trying to keep the market from crashing or housing bubbles from occurring.

Fixed or Adjustable
You have a couple of options when you get a 125% home equity loan. You can choose either a fixed or an adjustable interest rate. There are pros and cons to both, depending on the rate being used and whether it is currently high or low.

Fixed rates will lock you in at a specific rate for the life of your loan. Although you'll know up front exactly what you'll owe in interest, you may be stuck paying more if rates fall. On the other hand, adjustable interest rate loans generally offer a trial fixed rate for 1 to 5 years before transferring to the current rate at that time.

If rates go down, you're doing great; if they go up, your monthly payment could go up significantly. So, the rule of thumb is that if you can pay off the loan before the trial period is up, and the payoff fees aren't too steep, then it's okay to get an adjustable rate loan. The problem comes if your life unexpectedly changes, and you can't pay it off in time. Do what's comfortable for you now, since you can't predict the future.

According to Wachovia, you should be able to answer "yes" to these three questions if you are considering an ARM:

* Can I afford to make higher mortgage payments if rates go up?
* Do I believe that rates will remain the same or decline in the future?
* Do I plan on moving before 5-7 years?

 

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