Whether you are planning for major expenses such as a child’s tuition, need of cash for home improvements or remodeling, or would like to consolidate high interest debt into a single loan, the equity in your home may allow you to borrow the cash you need. Home equity is the difference between the appraised value of your home, and how much you still owe on it. A home equity loan allows you to borrow money against this equity you have built in your home. If you need extra cash for any reason and have equity in your home, Associates Home Loan of Florida, Inc. can provide you with a home equity loan that meets your exact needs.
Home equity loans are often referred to as second mortgages because just like your first mortgage, the value of your property is what secures the loan. For this reason, you will need to provide much of the same information as when you originally purchased your home. Information such as your income and credit history will need to be reviewed to determine if you qualify for a home equity loan. Your home and property will also be appraised to determine if you have sufficient equity in your home to support the loan amount requested.
If you qualify for a home equity loan, you will be able to choose from two typical types of loan. The traditional home equity loan is paid to the borrower in a single lump sum disbursement. This loan is repaid monthly at a fixed interest rate for the duration of the loan. The alternative option is the Home Equity Line of Credit, or HELOC. A HELOC is a line of credit with an adjustable interest rate that allows a borrower to choose when and how often they want to draw on that line of credit.
There are many reasons a Tampa homeowner may be interested in a home equity loan. Some of these reasons are smart and some are not. A few good reasons to take advantage of a home equity loan include making home improvements that will increase the value of your home, establishing an emergency fund for unexpected costs, and consolidating high-interest debts. Making home improvements and upgrades can allow you to substantially increase the value of your home and consolidating debts can save you a great deal of money that would have went toward interest.
Reasons you should not take out a home equity loan include purchasing luxury items such as cars, taking extravagant vacations, or purchasing expensive items such as jewelry and clothing. Using a home equity loan to cover day to day expenses such groceries and utility bills is also generally not a good idea. If you need additional cash to cover these expenses, you should revisit your budget before considering borrowing money.
If you have decided a home equity loan or line of credit is the right choice for you, Associates Home Loan of Florida, Inc. can provide you with the loan you need at a great rate. Contact us today for more information on Tampa home equity loans and lines of credit, or to begin the application process.