Advantages and Disadvantages of a Home Equity Mortgage By Phil Wiper |
There may be times in your life when a major expense may arise, either from an emergency situation, college expenses for your children, or a planned home improvement project. The question of where you should go to obtain funds can be a daunting one, and it is important to consider your options carefully. If you have a house, a home equity mortgage could be the answer for which you are searching.
Funds from these loans are borrowed against the value of your home which you have built up over time. Before considering whether or not to appropriate money in this manner, it is important to be aware of the advantages, as well as the disadvantages.
One point in favor of this type of mortgage is that banks consider it a low risk venture. Since the collateral has already been established, they are more likely to loan money against the existing property, even if you have less than perfect credit.
Not only does the collateral make it easier to receive funds, there is another plus. Because most homes have a large amount of equity, you would be able to borrow larger amounts of money than with other forms. Along with being more likely to grant the loan to you, loan companies will charge less interest rates than with other types of lending. This will definitely save you money over time and also allow you to build more equity on the second mortgage.
Even with the many advantages, as with everything there are a few disadvantages. It is most important to be conscious of these potential snags. Being aware of any pitfalls can help you be prepared in order to avoid any adverse consequences.
Since you are borrowing against your property, there is always the danger of losing it to the bank. This could occur if payments are not made on time. Hence, it is most important to keep current on your note to avoid this situation.
Other complications which needs to be addressed are scams. It is an unfortunate fact of life that there are people who will take advantage of others. This is especially true if you decide to go through a business other than your bank. Before choosing a loan company, be sure to research it thoroughly. Ask friends or family who they have used in the past. Consult the Better Business Bureau. Do not be afraid to ask questions and also review the contract. If you have the means, consult an attorney bearing a copy of the contract before signing to receive his or her advice.
If you have a home and are in need of money, a home equity mortgage could be an excellent way to get what you need, but it will affect your life considerably. Just remember that before making any major decision, weigh the pros and cons carefully, consider what your needs are, and research as much information you possibly can. That way you can make a well-informed, well thought out choice.
If you still have questions regarding the advantages or disadvantages of a home equity mortgage, it would be in your best interest to contact a mortgage broker first. Depending on the situation - your Dominion Lending Centres mortgage professional will be able to help and guide you through the process. Please do not hesitate in contacting me at http://www.philwipermortgages.ca. Article Source: http://EzineArticles.com/?expert=Phil_Wiper |
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