Loans Benefits to a Home Equity Loan 2nd Mortgage
May 26th, 2006
the Kitchen Sink
You decided to fix
up the house, remodel the kitchen, put a new floor down and maybe even
get your house painted. You really would like to get the job done as it
is way over due and you dont have enough funds set aside to pay for the
improvements. What you can do is get a home improvement loan which is a
2nd mortgage that will fund the project.
You will find
there are many different lenders available that offer different terms
and interest rates. You need to know how much the improvements are
going to cost. You will need to get some estimates by the contractors
that you anticipate hiring. A written quote is the most valuable as
this number will be valid for the time specified. Knowing how much the
improvements will cost will be the first step to getting the loan. You
probably will want to add a little bit extra to the quote price, as
construction costs can go over the quote price sometimes.
Figure out how
much the monthly payment can be for paying the loan back. If you can
pay more each month you can go with a shorter loan period. If you are
looking for lower payments then you will want to stretch out your
payments as long as you can. If you are able to find a 30 year fixed
rate 2nd mortgage you would get the lowest monthly payment.
You could finance
your home improvements by paying with credit cards. This may be ok in
some circumstances, but you need to ask yourself how long it will take
to pay off the home improvements. If it is going to take more than one
year then you will probably be better off with a home equity loan. By
getting a home equity loan the interest paid are tax deductible. Any
interest paid on personal credit cards are not tax deductible at this
time. You may be able to get a promotional no interest credit card
offer, but it will eventually expire and the interest rate is much
higher than a home equity loan.
A home equity loan
is a specified dollar amount paid out at one time. You usually have a
fixed interest rate and you have on average 10 15 years to pay the
loan back. By getting a single loan and not an open line of credit on
your home, you will not have to worry about variable interest rates and
incurring more debt. Your monthly payments will be at a fixed dollar
amount as well.
for a home equity loan is beneficial because it will allow you to get
the lowest rate interest as well as the pay back duration that best fits
your needs. You can use an online loan broker service such as eLoan,
Lending Tree that will shop around for you in a short period of time.
You could contact the banks directly but it will be more time and work
involved to accomplish what the loan broker is able to do quickly.
adjustable rate or interest only loans entice you with lower rates and
lower monthly payments, you are probably better off with the fixed rate
loans. If interest rates go up, so does your monthly payment and amount
of interest you pay. Currently interest rates are climbing slowly, so
it probably is not likely that they will be going down any time soon.
The goal is to pay off the loan in a specified time period or sooner
The best part of a
home improvement loan is that you have added value back to your home.
Maintaining your home and keeping it in great condition will add value
for years to come. Whether it is landscaping, roofing, an addition, or
a kitchen remodel, a home improvement loan is one way to finance your
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