A home equity loan is a perfect financial option for those who have a poor or bad credit history. However, before applying for one you need to seriously consider all the important factors influencing it or you may have to face serious repercussions incase you fail to pay the monthly installments. Hence, in order to ensure the money and financial security, it is necessary that you follow a few basic rules.
A 125% home equity loan is a feasible option for borrowers and enables you to borrow up to 125% of your property?s value. In order to secure a 125% home equity loan, you can consider the following basic guidelines that will help you to avail the home loan easily. The four tips for using the 125 percent home equity loans are as follows:
If you intend to move to another location, then the 125 percent home equity loan is not the right home loan for you. The location and duration of your stay greatly influences and determines the amount of the home equity loan. Since the home equity loan directly depends on the value of your home and you will be borrowing more than what your home is worth, chances are that most probably you may not be able to sell it at a profitable price, high enough to cover for you mortgage payment.
Since lenders usually do not require verification of assets or income documentation of the borrower for these types of home loans, they rely on the borrower?s credit report and scores in order to ensure that they will be able to repay the money within the time period granted. Therefore, it is necessary that your credit history be clear without any defaults, with a good credit score.
The more equity you avail of, the higher will be the rate of interest that you will have to pay. Hence, before you apply for a 125 percent home equity loan, be sure that you will be able to afford the additional burden of monthly installments. Failure to repay can eventually cause you to lose your home to the lender.
Using the 125 percent home equity loan in order to consolidate your existing debts and credit is a wise financial move. Since the rate of interest on home equity loans are comparatively lower than credit cards and other traditional loans, securing a 125 percent home equity loan can help you save a huge amount of interest and better cash flow.
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