Looking for a way to fund the renovation of a new home, invest in a second property, or pay for a child's college education? A home equity installment loans may fit the bill. Consumers often turn to home equity loans as a way to finance the huge costs or investments using money they have invested in their homes, without refinancing their mortgage.
What is a Home Equity Loan Installment?
A home equity installment loan is a loan that uses the equity you own in your home as collateral. With your home equity as collateral, lenders are willing to offer larger loans at lower interest rates than other types of loans.
Unlike a home equity line of credit, most of the standard home equity installment loans, loan once approved for a certain amount and must be repaid over a pre-arranged schedule of installments ranging from three to 30 years, similar to the primary mortgage or car loan. the number of payments include principal and interest.
Lenders are offering installment loans based on some percentage of the appraised value of your home, minus the outstanding mortgage amount. The maximum loan amount is calculated according to (LTV) ratio, loan to value, which may be as high as 80-90%. This means if your house is worth $ 150,000 with a mortgage balance of $ 100,000 ($ 50,000 in equity), at 90% LTV you could potentially qualify for a home equity installment loans up to $ 45,000 ($ 50,000 x 90%).
Who Uses a Home Equity Loan Installment?
this type of loan can be used to finance anything from home renovation for a wedding. Here are some reasons the main consumers of this type of credit securing:
• Finance home renovation
• Pay for college kids
• Pay off other, higher debt-interest
• Buying a second home or rental property
• Invest in business opportunities
• Pay for weddings, birthdays, holidays, or other major celebrations or events
installment loan is a good option if you have a large payment, a lump that you need to make right now but want to pay over time. They are also ideal in the market interest rate is not stable, which allows you to lock in a low fixed rate.Advantages and disadvantages
There are pros and cons for a home equity loan installments, and moments of these types of loans are more suitable than others. Read on for some tips to help you determine whether this type of loan is right for you.
A home equity installment loan is ideal for one-time purchase or investment, such as home renovations or the result of a high-interest debt, where you will only need to withdraw funds once and are ready to pay back at a fixed order of events. Installment loan is probably not a good idea for frivolous purchases that may be difficult to pay back. If you default on your loan stand to lose your home, so it's important to make sure you will have the means to pay back the funds according to the agreed terms.
On the positive side, because your home serves as collateral, you will most likely be able to get a lower interest rate than unsecured loans - which can mean big savings in interest payments over time. Interest rates are usually fixed for this type of loan, which makes it possible to lock in a lower rate that will not change with market fluctuations. You may even be able to calculate the interest as a tax deduction.
home equity installment loans are perfect for consumers who are interested in borrowing one and confident of their ability to pay for it. They are also suitable for those who like the security of a fixed rate.