Having a roof over your head
that you can call your own not only gives you a sense of security,
but in times of need can also become an excellent source of
credit. In simple terms, your home can turn out to be a great
source of money. You can draw out credit against the equity
in your home. Such a form of credit is referred to as a home
equity loan.
Home equity loans are preferred over other loans for many
reasons. For one, you can use the money from your home equity
loan in any way you wish. You can use it to remodel your home,
or pay off your debts or even finance your child’s education
or wedding. The second reason why these loans are so popular
is that there are a large number of home equity loan packages
available in the market that you can choose from. Thirdly,
these loans give you certain tax benefits that other loans
do not.
Home equity loans are a favourable alternative for banks
too. The obvious explanation for that being that there are
a lot of takers for these loans. So, banks earn a lot of business
via these loans. Another reason why banks love to lend out
home equity loans is that these loans are secured loans. In
other words, you have to pledge your home as security to draw
out such a loan. In an event where you fail to repay the loan,
the bank can always sell off your home and recover its money.
So, it always is a win-win situation for the banks.
Although, home equity loans seem like a lucrative option
for homeowners in need of some quick cash, you must always
be watchful against lenders and brokers who are unscrupulous.
They know that you cannot afford your mortgage payments, yet
they try and entangle you into taking a home equity loan.
Their motive, of course, is to bring your home under the risk
of foreclosure.
Your only safeguard against such people is to always research
and do your homework before you plunge into the lending market.
Also, always stay on guard against any hidden charges in the
loan contract. You must remember to read the fine print. Do
not hesitate to ask your lender as many questions as you want.
Remember, the lender needs your business, not you, so you
are in a stronger position. Some caution and a bit of smart
shopping can help you find that perfect home equity loan that
you so desire.
About The Author:
The author is a business writer specializing in finance and
credit products and has written authoritative articles on
the finance industry. She has done her masters in Business
Administration and is currently assisting chance4finance as
a finance specialist.
For more information please visit at http://www.chance4finance.co.uk
