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If you own a home, your options for tapping into your equity are
numerous. Some homeowners choose to refinance their home and cash-out at
closing. This may serve a two-fold purpose. You are able to lower your
interest rate, while acquiring a lump sum of money. Those who want access
to emergency cash may opt for an equity line of credit. However, if you
are not interested in refinancing, but need extra cash, a home equity
loan may be the perfect choice.

What is a Home Equity Loan?

A home equity loan is very similar to personal bank loans. However,
unlike personal bank loans which are difficult to qualify for, you may get
an equity loan with good or bad credit. Lenders are more eager to
approve a home equity loan because the funds are secured by the property.
Thus, if you have a low credit score, you may obtain a loan. Of course, a
low credit score may result in a higher mortgage rate.

When to Get a Fixed Rate Home Equity Loan?

Before applying for a home equity loan, carefully consider the
advantages and disadvantages. A home equity loan is a second mortgage. Instead
of paying one monthly mortgage, you are now responsible for two
mortgage payments. The second mortgage is generally cheaper, thus easier to
payoff.

Home equity loans are ideal for consolidating or eliminating high
interest credit card debts. This way, you are able to pay off your consumer
debt at a low fixed rate, and within a specified time frame. Home
equity loans are also useful when you have a large expense.

When to Avoid Home Equity Loans?

While home equity loans are very tempting, avoid applying for a loan if
you cannot afford another bill. In some cases, a second mortgage may
improve your finances. By consolidating credit card debt, you may save
money each month. However, if you are having a difficult time paying
creditors on time, do not get a home equity loan. More than likely, you
will also struggle to pay back the second mortgage. Thus, you are placing
yourself at risk for losing your home.

Here are our
Recommended Home Equity Loan Companies Online.

Carrie Reeder is the owner of ABC Loan
Guide, an informational website about various types of loans.

While on a roadtrip last Sunday, I saw two caravans of classic cars. They were all dolled up - looking better than they had in the showroom. Bright colors were all over the place.

It took me back to my college days. My dad, not realizing the power under the hood, bought me a 1968 GTO. That thing could really move! Going up a mountain, I could pull up behind a truck at 80 miles an hour and be going 120 by the time I was around him (not that I ever did that…). That GTO had about 400 horse power with a slushbox transmission. It took a while to get used to that.

The car was beautiful to look at. It was a gunmetal metallic gray with a paint job that looked about three inches deep. But what was the most impressive thing about that car was how comfortable it was. You get tired of sitting in most cars within an hour or two. But that car would let you ride all day and feel as fresh as when you got in.

The repair bills finally got the best of me. Unfortunately, just about every trip I took, something went wrong. On one trip it was a broken timing belt. Another time the coil just fell off! I had to get rid of it. I moved up to a Toyota sub compact.

Even though it only got about twelve miles per gallon, I wish I still had that car. It would be a great one to put back into showroom condition.

Ron M.