A home equity loan is a type of loan in which the borrower uses the equity built up in the home as collateral. A home equity loan is sometimes used to finance major expenses such as medical bills, home repairs or education expenses. It is sometimes referred to as a second mortgage or borrowing against your home. Learn more on this page about home equity loans and how you can use one.
A couple is planning on getting a new mortgage in a couple of years and wants to pay off credit card debt with a home equity loan. If you can trade non-deductible debt like credit cards for deductible debt like a home equity loan, it's usually the better deal. A home equity loan will charge less in interest than credit cards and you can write the interest you pay off on your federal income tax return.
It's one thing to take out a home equity loan to renovate your home. It can even be a good idea to use your home equity to pay down or pay off your credit card debts or auto loans. But a home equity loan isn't meant to buy Super Bowl tickets.
There are several options for financing a new home after retirement. If you are looking to finance a new home after retirement, try not to withdraw from accounts where you will be forced to pay a large tax. If you can afford it, the best way to finance a new home after retirement, is to take out a mortgage, rather than withdrawing from retirement accounts.
What's the difference between a variable rate loan and a fixed rate loan? Should I convert my variable rate to a fixed rate? A variable rate loan means that the interest rate will fluctuate over time. Sometimes it will go down and other times it will go up. If you're comfortable with not knowing exactly what your payment will be, but knowing there are some safeguards in place with respect to how much the rate can rise or fall in a single year, then your increased risk tolerance is rewarded with a lower interest rate.
Can home equity loans be used to buy rental property? You can't write off the interest you pay on the home equity loan as a rental property expense. Once a loan is tied directly to the rental property, you can write off the interest and any costs associated with getting the property.
A retired couple would like to pay cash for their new home. Seniors living on a fixed income should do everything they can to reduce their monthly expenses. You can pay cash for a house and open up a home equity line of credit instead of taking out a mortgage loan.
What should you do if you have property, like a vacation home that is in need of major repairs but your trust has no money to pay for them? One option for taking care of the vacation home could be taking out a home equity loan to repair the vacation home. A option that wouldn't be allowed for a vacation home is taking out a reverse mortgage because the home must be someone's primary residence. If no money can be procured for repairs, a decision to sell the vacation home may have to be made.
Sometimes, when couples divorce, one ex-spouse continues to make payments on a mortgage loan for the other. But in order to get someone's name on a first mortgage loan or home equity loan, the person's name has to be on the home's title. To remove one's name from a home mortgage loan or home equity loan you have to refinance the loan. At some point the ex-spouse who is no longer living in the home may decide he or she no longer wants to make payments on the home equity loan. How can the two former partners come to an agreement?
A couple shows how they cut several years off of their mortgage by getting a home equity loan. Their solution is a great way for seniors to improve their cash flow. Because more seniors are entering retirement with mortgage payments, it's even more important to be open to new financing techniques that can save money.
A homeowner has a small balance on their mortgage with a high interest rate, should he refinance or get a home equity line of credit? The homeowner and Ilyce cover the options for refinancing the remaining balance, or getting a home equity line of credit. Ilyce suggests a home equity line of credit instead of refinancing in order reduce interest.