A loan is an arrangement in which a sum of money is lent to a party with a future repayment obligation when the party keeps a certain asset as collateral. A borrower is liable to pay the principal amount that is borrowed plus the interest incurred at a certain rate of interest for the given period. Loans can be of several types secured, unsecured, commercial and personal loans.
The lender party first ensures the borrower’s creditworthiness and then gives the loan to secure the repayment. The creditworthiness is valued by the five C’s, character, capacity, capital, collateral or mortgage and conditions. Loans are granted for various purposes like Home loans, Study or Education loans, Gold loans etc. Home loans being one of the most common purposes, refers to the loan which a borrower borrows majorly for purchase or construction of the home and repays through EMI.
What are Home equity loans?
Home equity loans, also known as Home equity installment loans, are a type of consumer debt that permits the borrower to take the loan against the equity he/she has at home. Home Equity loans are of two types, one with a fixed rate and the other with a varying rate. The amount of loan sanctioned to the borrower depends on the current market value of the home and the mortgage balance due by the homeowner, that is, the borrower. Fixed-rate Home equity loans are generally provided in a lump sum and have a fixed rate and are generally borrowed for one-time expenses. The eligibility for the home equity loan depends on the employment history, income and credit score. The higher the credit score lower is the chances of defaulting, and thus, the lower is the rate. Another type of home equity loan is the Home Equity Line of Credit which works like a credit card.
Advantages of Home Equity loans:-
- Easy to avail as it is collateral-based, secured loan hence poor credit score does not affect.
- It helps to utilise the monetary assets lying at home.
- Fixed interest rate facilitates proper management of expenses.
Generally, the borrowers, mostly for the first year, pay off the interest rather than the principal amount, which is a big setback when they realise it later. Therefore to ease their struggle, the concept of equity accelerator was introduced. This programme speeds up the reduction of principal amount on the mortgage and thus helps pay off the loan, build equity, and save money of interest payment. The Equity Accelerator Calculator helps one calculate the amount to be paid bi-weekly and thus helps in reducing the principal. With the help of the Mortgage equity accelerator calculator, one can easily find out paying off the mortgage in which way would be beneficial to be done with the mortgage amount.
Best home equity loan rates:-
The equity is determined by calculating the difference between the current market value of the home and the outstanding amount payable towards the loan. The best home equity loans available for September are:-
- Discover- the second mortgage organisation in the U.S. provides a 3.99-11.99% rate on 35000- 200000 dollars for 10-30 years. Best for low rates.
- U.S. Bank- it is providing 3.8% on 15000-750000 dollars for up to 30 years. Best for low fees at the national bank.
- Indian bank- home loan rate by Indian bank is fixed at 9% and a floating rate of 8.60% to 9.05%
- Frost- providing 4.49% on $ 2000 for 7 to 20 years. Best for low fees at a regional bank.
- BBVA- providing 4.04 to 9.09% on 10,000 to 125000 dollars for 5 to 30 years with a required credit score of 670.
Home equity loans are a dream come true for much middle class and maybe rich people for building or buying their own house and with the help of the Mortgage Equity accelerator calculator and the Equity Accelerator Calculator systems to find out and evaluate the fastest mortgage pay off and principal reduction respectively, thus finding the best deal and achieving self-accomplishment.