How To Get a Home Equity Credit Loan

Introduction

A home equity loan allows you to tap into your homes equity to pay for anything you want or need. The interest on a home equity credit loan is tax deductible. This loan is typically a second mortgage so it is riskier since your interest rates will be higher than it was with your first mortgage.

 

Step 1

To begin with it is important to make sure that you have sufficient equity in your home to draw upon. This is because your home equity credit loan is secured by your home. You will need to talk to a loan agent in order to make this determination.

 

Step 2

The first thing you need to do is contact your bank or credit union. Hopefully you already have established a good working relationship with this institution. In this case, more than likely they will want to retain you as a customer. So they should be more than willing to work with you to get a home equity credit loan. Of course, you can also choose to contact other local banking and savings institutions that specialize in providing people with a home equity credit loan. If you are unable to locate these institutions or loan officers on your own for any reason, then you should ask a local real estate mortgage broker whether or not they will be able to recommend a lender for a home equity credit loan. Another option is to go online in search of them yourself.

 

Step 3

It is a good idea to understand what the process of applying for a home equity credit loan entails. One of the major things that you will be required to do is to get a home appraisal. Regardless of which lender you choose to work with, they will order this appraisal as it is the only way in which they will be able to determine what the true value of your property actually is. While you probably will not have to pay for it up front, you will have to pay for it in the end. Of course, this depends upon where you live. Nevertheless, you should plan to spend between $250 and $350 to have your home appraised.

 

Step 4

Whenever you go for a home equity credit loan you will also need to decide whether you want an adjustable interest rate or a fixed interest rate. Sometimes you will not have a choice here though if you have bad credit, your loan-to-value ratio is not good or the lender doesn't offer it.

Step 5

Keep in mind that even if you don't complete the home equity credit loan transaction, you may still be held responsible for paying the cost to have the appraisal done. You may also incur fees for having your credit report pulled and for anything else that your lender or broker had to pay for if you don't go through with the loan.

Tips and Comments

It is important to understand that a home equity loan is different from a home equity line of credit, which is a form of revolving credit in which your home is used as collateral.

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