Home Equity loans, also known as Liquidity credits, are a type of loan in which your house or apartment guarantees the debt. This credit offers many advantages; since the property is involved, the loan is considered less risky, and it is possible to obtain better conditions —lower interest rates.
A home equity loan (sometimes known as a HEL) allows you to borrow money using the equity in your home as collateral; proof of income is still necessary. The reason is simple: through this requirement, financial institutions can identify the payment capacity of the person requesting the loan, a critical factor in approving the liquidity credit.
Equity is the magnitude of your property’s current worth, minus the amount of any existing mortgage you have on it. You get the money from a home equity loan in a lump sum. A home equity loan typically has a fixed interest rate, which won’t change. The lender may foreclose on your home if you cannot pay the HEL. If you are considering a HEL to pay your debts, you should explore alternatives that do not place your home at risk of a forced sale with a credit counselor. Also, home equity loans can have upfront fees and costs, so be sure to compare factors other than the monthly payment when evaluating home equity loans. Before you take out a home equity loan to consolidate your debts, talk to a qualified credit counselor to help you compare your options.
Find a nonprofit credit counseling organization that can:
- Advise you on how to manage your money and debts
- Help you create a budget
- Offer you free educational materials or workshops
Another critical point is the credit analysis that helps determine the components of the loan, such as the monthly amount to be paid, the interest rate, and the term of the loan. Avoid companies that ask for hefty up-front fees, or make unrealistic promises, such as restoring your credit or paying off your debts, for just pennies on the dollar.
How much can you lend me?
As with acquisition loans, home equity loans have a maximum and minimum amount, depending on the financial institution. In Smart Lending, now Yave, you can obtain from 200 thousand pesos up to 50% of the value of your house.
Also, the interest rate and the monthly payment may vary. It will generally depend on the amount of the credit requested, the property that remains as collateral (market value), the term, and others.
And the million-dollar question, is it convenient to apply for a loan with a mortgage guarantee?
Let’s take an example. You have debt and spend a lot paying interest, whether for your car payment, credit cards, or department store bills. Amortizing or eliminating those high rates and obtaining a loan at a low rate represents an excellent way to reduce your commitments, pay less interest and regain your peace of mind.
Is it safe to apply for a home equity loan?
Fear of losing property – or online fraud – and lack of information are some of the reasons why most people do not apply for these types of loans.
Contrary to the myth that ensures that the financial institution will keep your property, the property will remain in your name during the credit period —although it will not be free of liens—. It is necessary to understand that the recovery process of the guarantee, that is, of the house or apartment, only takes place when the owner does not pay and all alternatives for debt renegotiation have been exhausted.
What can you use a home equity loan for?
- Refinance another liquidity credit
- Pay commitments with another institution (payment of debts)
- Real estate investment
- Personal emergency
- Home remodeling
Why choose Yahweh?
- Low and fixed-rate (from 16%)
- Speed (response within 24 hours)
- Term of up to 15 years
- 100% online process
You can begin your search on the National Foundation for Credit Counseling (NFCC) website or by calling 800-388-2227. Once you have located the closest advisers, check with Better Business Bureau or your state Attorney General to see if any of them have a history of complaints.
Tip: Be careful about borrowing money against your home as part of an investment strategy. There is nothing as a “guaranteed” or “risk-free” investment. You should carefully consider all your options before making a loan against your home to invest in. All assets can drop in value, which could place your home at risk if you can’t repay the loan later.
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