125% Home Equity Loans: No Equity Financing for Extra Cash & Debt Consolidation
New home owners often find themselves in a spot. Their mortgage payments are high enough to be uncomfortable, they’re still getting their new lives off the ground and so feel an economic pinch from other expenses, and yet they haven’t owned a home long enough to have built up sufficient equity to borrow against. So what to do?
Recently, financial companies have developed a new plan targeted at new home owners: the 125% home equity loan. these loan plans basically allow you to borrow one-quarter more than your home’s fair market value. So, for instance, a home which is worth $300,000 could be financed for $375,000, giving the borrower an extra $75,000. This is extremely useful, since any debt incurred through other loans, such as credit card debt, can be consolidated and paid off with the extra money from the home loan, which can then be paid off at a much lower interest rate.
The two types of 125% home equity loans are closed-ended and open-ended. A closed-ended loan works very much like a second mortgage. These loans have a set time limit, usually around fifteen to thirty years, and the interest rate is fixed so that the amount of the payments don’t fluctuate. At the closing of a closed-end loan, the lender will usually pay off the remaining mortgage and give the borrower the extra cash in one lump sum. It is even possible to qualify for a second concurrent loan. A home equity loan, should you take the risk?
By contrast, an open-ended 125% home equity loan uses your home as collateral for a line of credit, rather like a secured credit card works. The lender sets up a limited line of credit, and the borrower may access it at any time using such instruments as a credit card, checks or both to borrow from the account.
In both cases, the application process will involve the usual steps of title search, appraisal, attorneys and points. In addition, some small fees may be incurred including a participation fee or transaction fee. And of course, the loan works with the real property itself as collateral, with the usual penalties from default up to and including foreclosure.
The 125% solution is a recognition of the increased importance of real estate value in today’s economy. If you’re owed it already and you can benefit from it, you might as well claim it! This site helps you grow the value of your home by by at least another $40,000 quickly so you can use that value for something else. You can see it here. Moreover, if you are looking for a reliable and established lender, we thought this to be one of the better lending services in America.