More Home Equity Creates Greater Financial Power For You

Category: Finance, Mortgages.

Imagine sitting on your front porch one rainy evening, and feeling a drop. Your roof is leaking, and needs to be replaced.

Then another drop. The problem is, every dollar of your pay check is already budgeted to cover your monthly expenses. Home equity mortgages are a marvelous concept for property owners in need of ready cash. In this case, a home equity mortgage can help keep the roof over your head. If you' re interested in taking advantage of the opportunity that's available to you, it's important to fully understand the concept of a home equity mortgage, and know how a mortgage works. As the borrower you are required to repay the borrowed amount, to the lender, plus interest.

A mortgage, like any type of loan, involves borrowing money from a lender. Mortgages require a series of weekly, bi- weekly or monthly payments. In essence, if you continue to pay your set mortgage payments over the period of amortization, your mortgage will be paid in full and you will be debt- free. The mortgage will be amortized over a fixed period of time, usually twenty- five or thirty years. Over time, as you continue to make your monthly mortgage payments, your home equity begins to increase. The value of the property grows to become a major asset for you.

Every payment you make means that you own a little more of your home. More home equity creates greater financial power for you. In essence, you are borrowing money against the value of the property that you already own. Home equity mortgages are amounts of money borrowed against the value of your own property. Homeowners have different reasons for taking out home equity mortgages, but it always boils down to cash generation. You will likely be paying about five percent interest on your mortgage, but a staggering eighteen percent, on your credit, or even more card.

Many homeowners turn to home equity mortgages for debt consolidation, because the interest rates on mortgages are much lower than those on other types of credit. For this reason, it makes perfect sense to pay off all of those other high interest debts, and incorporate or' consolidate' them into one easy monthly payment at a lower rate. The trick to using a home equity mortgage for debt consolidation is having enough home equity to provide cash after covering the costs associated with the additional mortgage. The reduction of stress alone is worth the effort, as you will be able to breeze through the month without facing a stack of overdue credit bills. Homeowners also take out home equity mortgages to cover children's education funds, home improvements and virtually all sorts of reasons that they need to have cash on hand. When prevailing market rates are lower, it's wise to refinance the loan and lock in at a lower rate.

Some homeowners will turn to home equity mortgages as a means to take advantage of lower interest rates. This can also be a relatively easy way to generate extra cash. Borrowing against your home gives you access to funds that you can invest into a plan that pays a high rate of return. There are investment opportunities to be had from home equity mortgages. Whether you need cash today, would like to consolidate your debts, or want to have a little extra tucked away for the future, home equity mortgages can offer the help you' re looking for.