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LENDING >> HOME EQUITY

Home Equity Considerations

As your home increases in value and your mortgage loan(s) are being paid down, your equity in the home grows. This equity can be put to work (tax free) for investing and increasing your investment portfolio.

Refinancing to invest - you can borrow against your current home equity and place that money into investment programs to increase your net worth.

Debt Restructure - Debt Restructuring (also referred to as Debt Rescheduling) is one of the best solutions for resolving your personal financial problems in the event that you can't pay all of your bills. Debt restructuring occurs when a borrower and a lender renegotiate the original terms of a loan, altering the payment schedule or debt-service* charges.

Home Equity Loans vs. Home Equity Lines of Credit (HELOC)

These types of debt are often referred to as second mortgages because they are secured against your property just as your purchase or original mortgage.

These types of loans are usually repaid in a shorter period than first mortgages. Most first mortgage are set up to be repaid over 30 years. Equity loans and lines of credit often have a repayment periods of 5 to 20 years.

A home equity loan is a one-time lump sum that is paid off over a set amount of time, with a fixed interest rate and the same payments each month. Once you get the money, you cannot borrow further from the loan.

A home equity line of credit works more like a credit card because it has a revolving balance. It allows you to borrow up to a certain amount for the life of the loan which is set by the lender. During that time, you can withdraw money as you need it. As you pay off the principal, you can use the credit again, like a credit card.

A line of credit has a variable interest rate that fluctuates over the life of the loan. Payments vary depending on the interest rate, the amount owed, and whether the credit line is in the draw period or the repayment period.

With either a home equity loan or a line of credit, you have to pay off the balance when you sell the house.

Both of these types of loans can have a substantial impact on your financial well being. It is recommended you get reliable and knowledgeable advice before making a decision. If you need more information or assistance with your loan decisions, our team of professionals are standing by to be of service to you.

*Debt Service: Debt service is the total amount of principal and interest due on a loan in a given period.

Here are some online resources that can help you in making your decision:

At My Twin Cities Home we have available over 100 different sources of funding for your needs. We will seek out the best program to match for what you are looking for. Balancing finances with the best loan product for you for your long term financial health.