Home Equity Loans or also known as secondary mortgage is one of the most popular home loan program that is currently available today. This is the fastest way in acquiring money in no time. The initial process works by allowing homeowners to borrow money base on the equity that they have inside their home. The interest on the home equity loan is tax deductible. this policy is the main reason why this program is so popular. It also has the characteristic properties of a secured loan. Because of the flexibility of Home Equity Loans many people are now attracted to this loaning program.
Although Home Equity Loans now cater thousands of clients, it is still not a perfect loaning program. Like any other coin, it also has its flaws and disadvantage that is why it is important that a detailed analysis is established first to easily differentiate the features of the equity loan.
In terms of benefits when to compared to other secured and unsecured loans, it offers an edge because of its risk free loaning feature for lenders. This program also provides maximum amount that is proportionate to the value of the equity. Good houses that are situated in real estate booming locations can be provided with high appraisal of as much as one hundred percent. The usual appraisal though starts from eighty percent. Also in addition to this, another notable advantage of Equity Loans is in the interest rates they provide. The alluring interest rate also offers an advantage for homeowners which usually come in a low fixed value.
The most enticing advantage of Home Equity Loans is its pronounced benefit in tax because it is tax deductible. The mode of payment can also be conveniently selected ranging from 10 years and can be extended all the way up to 30 years. Moreover, the application process is very quick and easy. It is less time consuming especially with the entry of internet and online lenders
However, Home Equity Loans are not with no cons. One major cons of this loaning program is the risk of losing a particular property. Failing to pay the amortization leading to default in payment can lead to this force ownership of property. Although this is legal, the risk is just heavily penalized. This is also not advisable for individuals who are still beginning to build their career. The borrower also has to keep in mind that long repayment schedule will result to an increase in overall pay.
This equity program is a great source of money for people who are in need of an immediate source of cash. They are very appealing because of the lower rate they give which is actually lower than credit cards. Individuals with credit card loans can benefit from this loaning program too. They provide a quick and easy access to money. It is also important to consider the long run picture. Not all people are suitable to this kind of loaning program that is why it is important to evaluate present status first.