Cash Out Home Equity

A cash out home equity loan can be referred to as a second mortgage or a HELOC which stand for home equity line of credit, or it can be an entire new mortgage allowing the homeowner access to some long hidden property investment. After many years of faithfully paying a monthly mortgage payment, this type of loan can be the reward for homeowners who have maintained a good track record of borrowing practices. Both a cash out home equity mortgage and a home equity loan can offer homeowner to have an interest tax deductible loan for any needs desired, including a cruise around the world, matching motorcycles, a new electric car, a swimming pool or college tuition for grandchildren. The name of the financial transaction really says it all because homeowners are treating their homes like a giant piggy bank, turning it upside and shaking out all the loose currency like a sofa cushion often hides. For many people, this financial option sounds like a pretty cool possibility, and well it might be, but there are considerations to be pondered before signing on the bottom line.

Consider first a cash out home equity line of credit. This is a second mortgage that enables the home owner to take out a lending agreement based on a percentage of the property investment that has been established by the homeowner making regular monthly mortgage payments for a period of time. This lending agreement will allow the homeowner to have up to fifty to seventy percent of the entire equity in the house. It is a loan that will have a higher interest than the first mortgage, and may take up to month to receive. In addition, many home property investment loans may have upfront costs such as appraisal fees, title fees, origination fee, and processing fees. These fees may be quoted as points, with each point representing one percent of the loan's value. In many cases, the loan becomes a line of credit allowing the homeowner to write checks on the lending agreement.

A cash out home equity line of credit is almost always a variable interest loan. By law, there is a cap on how high the interest can climb, and may be based on the value of prime as established for example by the Wall Street Journal each day, plus several percentage points. Some lenders will allow borrowers of this kind of loan to have an interest only loan, which means that only the interest on the loan is paid each month. But at the end of the agreement, the entire amount of the principle will be due. If the homeowner cannot pay the amount, another lending agreement will have to be secured, and if that cannot happen, a foreclosure on the house is probably imminent. "For all have sinned and fallen short of the glory of God." (Romans 3:23)

Another option for a cash out home equity loan is an actual new mortgage often called a refi in financial circles. In this scenario, the homeowner takes a loan out for the original selling price and pockets the equity money. Again, a number of loan costs will be attached by the lending entity and must either be paid separately, or many times they can become attached to loan. In this loan, all of the equity in the house may be gleaned by the homeowner as opposed to a percentage through a home equity line of credit. But there is a large consideration for those making a decision to secure a cash out home equity loan of this type. In a cash out home equity refinance mortgage or a home equity loan, the homeowner is beginning all over again to pay for the house that has been lived in for a number of years. Once again, most of the payments go towards interest in the early years and little declination in the principle amount can be anticipated.

It is wise to shop around with a number of lenders and it is even savvy to let different lenders know that they are competing with one another for this cash out home equity loan. Don't be afraid to ask each lender to lower the amount of the closing fees or points and have three or four agreements in hand to show other lenders. Take the final agreement to an attorney or a sharp real estate agent or both before signing. At the closing if there are things that cause a person to be uncomfortable, renegotiate or walk away. And make sure that the contract has the caveat allowing the customer to change his/her mind within three business days and get all or most of the money back that was paid for any fees.

If only every opportunity in life allowed the chance to decline the deal and walk away. No doctor, I refuse your right to give me bad news, I'm outta here. No, Mr. Sheriff, I decline the traffic ticket I have just received, now please excuse me I have some speeding to do. Okay, I do not like this grocery bill, I think I'll just leave the food right here in the checkout lane and go start a garden. The thing is, a person can't walk away from what God has declared to be reality, and that is everyone is lost and headed for eternity in a place where God is not, which means no love, no joy, no laughter, no music, no light, and no heaven. There is bad news for the crowd that thinks every religion is a path to salvation. Jesus said that He is the way, the truth and the life and no one comes to God except through Him, end of story.



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