Equity Mortgage - Get Cash Out of Your Home

Get Cash Out of Your Home By Shannon Curcio

There are a lot of ways to borrow money such as personal loans, auto loans, credit cards or payday advances. For homeowners, however, there is one more opportunity to get cash to use for a variety of different purposes, and it comes in the form of an equity mortgage.

An equity mortgage, also known as a home equity loan or a second mortgage, is a loan granted based on the accrued value a borrower has in their home in comparison to the market value of the home. For example if a person owns a house that is worth 200,000 dollars in market value and only owe 150,000 dollars on a mortgage for the property, the homeowner could potentially borrow up to 50,000 dollars against the house.

Lenders who already service a mortgage a property can also extend a second mortgage most often referred to as a home equity line of credit. Companies not associated with the current mortgage holder can also extend a home equity loan to a borrower who has rights to the real estate. No matter where the home loan comes from, the equity loan is a separate loan with separate terms such as interest rate and payments than the primary mortgage.

People take out home equity loans for a variety of reasons. Some of the most common include improvements to the mortgaged property to increase its value, large one time payments like elimination of debt or unexpected costs. Most mortgage lenders are not concerned with what the borrower uses the money for because the loan is still secured by the property. This means that a mortgage company can potentially foreclose on the property if the borrower defaults on the loan.

When consumers shop for an equity mortgage, it is best to first contact the lender that holds the primary mortgage on the property. A borrower and the primary mortgage company already have a relationship. If the relationship is good they will be more likely to offer better terms, faster application and approval processes as well as a certain degree of predictability from dealing with a familiar company.

An equity mortgage is an excellent source of borrowing for home owners and can offer much better rates than personal loans or credit cards. Tapping into a home's equity to make needed improvements or increase the market value of a home is a beneficial use of a second mortgage. Article Source: http://EzineArticles.com/?expert=Shannon_Curcio