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Home Improvements Financing
Home Improvement projects generally require flexibility of time and money. A great program when considering a home improvement project is the Home Equity Line of Credit (HELOC).
If you want a reserve of funds you can draw on in the future, choose our Home Equity Line of Credit. You'll have the credit you need when the need arises - and you make no monthly payments until you draw on it. Be ready for projects like home improvements and expenses like medical bills, emergency repairs, tuition, and more.
- How do HELOC’s work?
- What are the benefits of a HELOC?
- How much equity do I have?
- Details on closed-end Second Mortgage or HELOC plans?
- How much will my payments be?
How Do Equity Loans Work?
A Second Mortgage loan is a loan secured by the equity in your home. Equity is the difference between the “value” of the home and the “balance” of the existing mortgage on the property. Equity is fast becoming one of the most valuable assets in this country. Homeowners can borrow against the equity for a variety of reasons and benefits.
How much equity do I have in my home?
What is the difference between an Equity Line of Credit and another type of second mortgage?
A Home Equity Line of Credit is a line of credit that can be used as you need it. You can use any portion of it at any time and pay it back at any time. The interest rate is usually variable and is usually tied to the prime rate. Other types of second mortgages, such as the Home Equity Loan are closed-end loans in that you receive the money when the loan is funded. You borrow a lump sum and pay it back over a period of years with interest. The interest rate for these products is fixed.
Our Home Equity loans are simple interest rate products.
What are the benefits of a HELOC? - Benefit Comparison
Closed-End Loan Benefits
A closed-end home equity loan could be a great source of funds for a number of reasons: no change in an existing first mortgage, the possibility of tax deductible interest (consult your tax advisor), low interest rates, no mortgage insurance required, and you can use the loan for any purpose. A Home Equity Loan is the right choice for things like debt consolidation and single-purpose purchases. These purchases could include: automobiles, medical bills, college tuition, and even extra cash.
- Lower monthly obligations
- Possible tax deductions
- Lower interest rates vs. credit cards
- Simple interest vs. compounding interest
- Increase cash flow
- Fast money
- Closed-end Home Equity Loan rates vs. Credit Card rates
Line of Credit Benefits
As far as consumer loans go, Home Equity Lines of Credit have some of the lowest interest rates and minimum payments. Application and documentation requirements are generally less demanding than traditional first or second mortgages. This makes it easier to qualify. Mortgage insurance is not required on any Home Equity Lines of Credit, thus reducing monthly payments. Interest payments may be tax deductible (consult your tax advisor). Home Equity Lines of Credit may reduce your monthly debt payment if the borrower uses them to pay off existing debts.
How Much Equity Do I Have?
Using the roof over one's head as collateral for sizable amounts of credit has become an extremely popular and efficient way to borrow. Equity is the difference between your home's appraised -- or fair market -- value and your outstanding mortgage balance. If you have equity in your home, borrowing against it might be a very effective way to get some things you need at a good price. This money can be used to pay for things such as: home improvements, medical bills, college tuition, and even extra spending cash.
Here is a formula to help you calculate the home equity you have available to you!
Your home’s appraised – or fair market – value
- (minus)
Your outstanding mortgage balance
= (equals)
Maximum Available Home Equity
Now that you know the amount of equity you have available in your home, call ditech at the toll free number shown above in order to unlock that equity.
Details on closed-end Second Mortgage or HELOC plans? Detail Comparison
There are two types of home equity loans: term, or closed-end home equity loans, and lines of credit (HELOC). Both are usually referred to as second mortgages, because they're secured by your property, just like your original (first) mortgage. Home equity loans and lines of credit are usually for a shorter term than first mortgages.
A closed-end home equity loan, or term loan, is provided to you as a one-time lump sum that is paid off over a set period of time, with a fixed interest rate and equal payments each month. Once you get the money, you cannot borrow further from the loan.
A HELOC works more like a credit card. You are allowed to borrow up to a certain amount over the life of the loan -- a time limit set by the lender. During that time, you can withdraw money as you need it. As you pay off the principal, your credit revolves and you can use it again. This gives you more flexibility than a fixed-rate home equity loan.
Credit lines have a variable interest rate that fluctuates over the life of the loan. Payments will vary depending on the interest rate and how much credit you have used. When the life span of a line of credit has expired everything must be paid off. A lender may or may not allow a renewal.
Lines of credit are accessed by specially issued checks or a credit card. Lenders often require you to take an initial advance when you set up the loan, withdraw a minimum amount each time you dip into it, and keep a minimum amount outstanding.
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Debt Consolidation Loan
Credit Debt Consolidation
Several sources indicate that only a little over one-third of all cardholders pay off their balances every month. That means that debt payments have an extra-heavy impact on the 64% of cardholders who carry balances. The rising level of credit card debt is often cited as one of the major factors in the rising U.S. personal bankruptcy rate. Numerous theories have been advanced to explain the increases, including aggressive marketing by credit card issuers and a lack of discipline on the part of consumers.
Most people do not realize how much money they are paying their credit card companies each year. More so, they never realize how long it would take them to pay off their debt by just paying the minimum payment due.
Some credit card companies charge “compounding” interest
All of our HELOC’s and closed-end home equity loans charge “Simple” interest
One of the most effective ways to eliminate your current credit card debt is through a fixed rate Home Equity Loan.
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Types Of Interest
- Simple Interest:
- Simple interest is interest paid or computed only on the original principal of a loan. It is the amount of money that lenders charge for the use of their money. Principal refers to the original amount of money borrowed. Interest, usually shown as a percentage, (for example, 6%) is also expected back in return. When you repay a loan or credit card, part of your payment goes to the principal. Some of it also goes toward paying interest. The loans that we provide are based on simple interest.
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- Compounding Interest:
- Compounding interest is determined when you add the interest earned in the current period with the principal. You then compute the next period’s interest on this new “compounded” total amount. With compounding interest, the interest charged on the principal is actually added to your principal for the next period.
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Equity FAQ
What is the difference between an Equity Line of Credit and another type of second mortgage?
An Equity Line of Credit is money in a loan account that can be used as you need it. You can use any portion of it at any time and pay it back at any time. The interest rate is usually variable and is tied to the prime rate. Another type of second mortgage is the Home Equity Loan which is a closed end loan product. You borrow a lump sum and pay it back over a period of years with interest. The interest rate for this product is fixed.
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Will a second mortgage allow me to borrow funds against my existing property?
ditech offers several solutions to borrow funds against your existing property value.
- Home Equity Line of Credit
If you want a reserve of funds you can draw on in the future, choose our Home Equity Line of Credit. You'll have the credit you need when the need arises - and you make no monthly payments until you draw on it. Be ready for expenses like medical bills, emergency home repairs, tuition, and more.
- Home Equity Loan
If you want to borrow up to 100% of your home's value at a fixed rate of interest, choose our Home Equity Loan. Use those funds for a purchase opportunity, home maintenance, debt consolidation, or major expenses.
To learn more about these and other products, call us any time at 1-305-220-7456.
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How do I know how much equity I have in my property?
Equity is the value of a homeowner's interest in real estate. Equity is computed by subtracting the total of the unpaid mortgage balance and any outstanding liens against the property from the property's fair market value. A homeowner's equity increases as he or she pays off his or her mortgage or as the property appreciates in value. When a mortgage and all other debts against the property are paid in full, the homeowner has 100% equity in his or her property.
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How can I draw credit when I need it?
If you want a reserve of funds you can draw on in the future, choose our Home Equity Line of Credit. You'll have the credit you need when the need arises - and you make no monthly payments until you draw on it. Be ready for future expenses like medical bills, emergency home repairs, tuition, and more.
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