Equity Loan

Equity loans are made available to homeowners who have a low loan balance to value ratio in their home and desire to utilize this ratio to receive cash. This funding program is tax free because the money derived from equity is not considered income, as the homeowner has received that amount by paying down the mortgage. An equity loan can be dispersed in one lump sum or used as a line of credit up to a predetermined limit based on the amount in the home. Typically there are no strict repayment schedules to adhere to with this form of assistance.

The money can be due (with interest) when the home is sold, or at any time the homeowner is able to pay it off. Equity loans are relatively easy to qualify for if there is a sufficient amount in the home to cover the amount of money requested. The money can be dispersed quickly (within 2 weeks) as long as all documentation is provided to the lender in a timely manner. The average equity loan will carry a low interest rate, which would explain why they are so popular among homeowners. They can also be used for whatever the borrower wants, unlike a mortgage, automobile, or boat loan.

Common purchases associated with equity loans are children's education, home improvements and vacations. Recently educational student loans have been a better route to go in paying for educational tuition and living because of the national interest rates being so low, however, in the past an equity loan was the most popular way of funding a child's college education. There are programs available for those with bad or no credit as well. These may carry a higher interest rate, but still offer the borrower tremendous leeway in spending ability that most other larger funding programs don't offer.

If a homeowner does not have enough equity in their home to receive standard funding, then there are programs for borrowers that act as second mortgages and can utilize up to 150% of the equity. For example: A homeowner has a home that is worth $100k. They owe $90k on their mortgage. Through multiple unique programs, they may be able to receive a $15k home equity loan. This type of program requires stable consistent employment and good credit. It is important to thoroughly evaluate all options before applying for any particular program. Having good judgment, discretion, and faith in God will allow consumers to choose the most appropriate lending company and program for their personal financial needs. "My son, let not them depart from thine eyes: keep sound wisdom and discretion" (Proverbs 3:21).

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